AN OPPORTUNITY ZONE IS A COMMUNITY WHERE NEW INVESTMENTS, UNDER CERTAIN CONDITIONS, MAY BE ELIGIBLE FOR PREFERENTIAL TAX TREATMENT. LOCALITIES QUALIFY AS OPPORTUNITY ZONES IF THEY HAVE BEEN NOMINATED FOR THAT DESIGNATION BY THE STATE AND THAT NOMINATION HAS BEEN CERTIFIED BY THE SECRETARY OF THE U.S. TREASURY VIA HIS DELEGATION AUTHORITY TO THE INTERNAL REVENUE SERVICE.
Opportunity Zones offer investors three incentives for putting their capital to work in targeted communities:
An investor can defer capital gains until 2026 by rolling their gains directly over into an Qualified Opportunity Fund
Investment in the Qualified Opportunity Zone provides a step-up in basis of 10% in Year 5, followed by an additional 5% in Year 7, creating a total 15% reduction in tax liability.
Any capital gains on subsequent investments made through a Qualified Opportunity Fund accrue tax-free as long as the investors stays invested in the fund for at least 10 years