Opportunity Zones

Paying Capital Gains after a big sale is unavoidable, but what if there was an investment vehicle that could minimize or even eliminate capital gains? Introducing Opportunity Zones.
What is a Qualified Opportunity Zone (QOZ)?

The Tax Cuts and Jobs Act of 2017 established the Qualified Opportunity Zone program. It is designated to incentivize long term investments in areas targeted for economic development. Investors are able to defer capital gains taxes that they invest in QOZs, and eliminate the capital gains that they invested in the QOZ program when held for at least 10 years.

  • Advantages of Opportunity Zone Investments:

  • Eliminate Capital Gains Tax: Hold an Opportunity Zone capital gains investment for 10 years to avoid capital gains tax upon disposition.

  • Deferred Taxes: Postpone taxes from the original sale until December 31, 2026, or when the investment is sold, whichever comes first.

  • Compounding Potential: Capital gains within the fund that generate earnings can be used for reinvestment, speeding up the velocity of wealth building.

  • Community Impact: Injecting capital into underserved areas via real estate projects fosters growth in businesses, jobs, and economic outlook.

The example below illustrates the potential impact on ROI: a QOZ Investment could yield over 32% greater returns, assuming a 2.56x equity multiple.

Whereas most QOZ funds are located in economically depressed areas, Moscow Idaho is one of the only Opportunity Zones in America that is also located in a thriving University setting.

Please note that Investments in Qualified Opportunity Zones involve risks. Tax laws and regulations are subject to change, and any benefits are contingent on meeting the specified requirements required by the Tax Code. These types of investments typically have a long-term horizon, and early withdrawal of funds may be subject to restrictions and penalties. Additionally, the regulatory landscape surrounding Qualified Opportunity Zones may evolve. While investments in Qualified Opportunity Zones offer potential tax benefits, it is essential to consult with your tax advisor to fully understand the implications based on your individual tax situation.