Opportunity Zones Investing
Defer capital gains tax with Opportunity Zones under the Tax Reform Act
The recently passed Tax Reform Act included a potential tax break for investors. Through this program, an investor may defer capital gains taxes on the sale of any asset by investing those gains through a Qualified Opportunity Fund. These original taxes can potentially be deferred until 2026, or upon the sale of the new investment (whichever is earlier). Alongside the deferral, this original capital gains tax is reduced by up to 15% over time. In addition to those benefits, when held long enough, appreciation from the new investment can be realized tax free.
How does the opportunity zones program work?
An investor sells an asset and generates a capital gain. The capital gains from that investment must be reinvested within 180 days into a designated Opportunity Zone (OZ). An OZ is a specially designated census tract. Large parts of the U.S. are eligible for designation, including many commercial, industrial and residential areas.
If the investment is held, the capital gains liability on the original investment will be reduced by 10% after five years and by 15% after seven years. After 10 years, the new capital gains taxes generated from the opportunity fund investment are reduced to zero.
We believe this is one of the most beneficial tax reforms in decades. Learn how Madison Capital Group, LLC can help you potentially take advantage of this opportunity.