REDEFINING REAL ESTATE INVESTMENT

OPPORTUNITY ZONE FUND

What are Opportunity Zones and how do they work?

Opportunity Zones are tax incentives to encourage those with capital gains to invest in low-income and undercapitalized communities. The Tax Cuts and Jobs Act included a new federal incentive—Opportunity Zones—meant to spur investment in undercapitalized communities. Any corporation or individual with capital gains can qualify. The program provides three tax benefits for investing unrealized capital gains in Opportunity Zones: Temporary deferral of taxes on previously earned capital gains. Investors can place existing assets with accumulated capital gains into Opportunity Funds. Those existing capital gains are not taxed until the end of 2026 or when the asset is disposed of. Basis step-up of previously earned capital gains invested. For capital gains placed in Opportunity Funds for at least 5 years, investors’ basis on the original investment increases by 10 percent. If invested for at least 7 years, investors’ basis on the original investment increases by 15 percent. Permanent exclusion of taxable income on new gains. For investments held for at least 10 years, investors pay no taxes on any capital gains produced through their investment in Opportunity Funds (the investment vehicle that invests in Opportunity Zones).

WHAT IS AN OPPORTUNITY FUND?

An opportunity fund is an investment vehicle designed to invest in real estate in  areas known as “opportunity zones.” Opportunity zones are specific geographic  areas designated as economically distressed. Tax incentives for investments in  opportunity zones include delayed and potentially reduced taxes on capital gains

INVESTING IN OPPORTUNITY ZONE PROPERTIES

Opportunity funds must make “substantial improvements” to the properties in  which they invest. The Tax Cuts and Jobs Act defines substantial improvements as  investments in the property that are equal to the original value paid by the fund.
These must be made within 30 months. For example, if a property is purchased for
$700,000, the opportunity fund has a 30-month window to make at least $700,000  worth of improvements.
Certain types of business cannot be included in opportunity funds, even if they reside within opportunity zones, including:
  • Golf courses
  • Country clubs
  • Massage parlors
  • Hot tub facilities
  • Suntan facilities
  • Racetracks or other facilities used for gambling
  • Liquor stores

OPPORTUNITY FUNDS EXPLAINED

Opportunity zones were created as part of the 2017 Tax Cuts and Jobs  Act to encourage investment in underfunded, low-income and distressed  communities. In order for a community to be classified as an opportunity  zone, it must be designated by the state and subsequently certified by the  Secretary of the U.S. Treasury, via the IRS.

business included in opportunity zone fund

  • Multiple Family Homes
  • Construction
  • Affordable Housing
  • Building
  • Hospitality
  • Real Estate Investment Property
  • Real Estate Funds

CONTACT US

info@Accessnationwiderealty.net 

+877-270-2980

2031 Harrison St Hollywood FL 33020

Compare listings

Compare