BY BRAD BECKETT ON OCTOBER 6, 2018
What exactly are these “Opportunity Zones” that were created in the Tax Cut and Jobs Act of 2017? A recent article in HousingWire gives readers “the skinny” about these overlays and suggests they “are probably the buzziest potential solution for the affordability crisis and local economic stimulus out there at the moment.” They also report that the program is meant to encourage investors to reinvest their capital gains and those can come from any investment – stocks, bonds, real estate or partnership interests. In addition, they explain how they work, who benefits and how they might revitalize struggling communities. Indeed…
“To qualify for the opportunity zone tax breaks, investors must invest their capital gains in an Opportunity Fund Zone within 180 days of receiving those gains. The money cannot be invested directly into a property, and funds must invest 90% of their capital into opportunity zone properties.”
“If they do this, shareholders will be rewarded with tax breaks based on how long they keep the interest in the funds. Shareholders who keep their investments for five years will pay no taxes on 10% of their gains; at seven years they will pay no taxes on 15% of gains; and if they hold their investments for 10 years, they pay no taxes on their gains at all.”