Opportunity Zone Investors

---

OPPORTUNITY ZONE INVESTORS NEED CAPITAL GAIN.

Only investors (individuals or businesses) who are subject to taxation in the United States with existing capital gains can enjoy the tax benefits offered by Opportunity Zone investments. Investors with capital gains are required to invest into an investment vehicle called a Qualified Opportunity Fund  (QOF) within 180 from the date their capital gains were recognized. While investors are free to invest an unlimited amount of capital into an OZ investment, only the portion equaling their capital gains will qualify for tax free growth. 

Capital gains exist when investors sell a capital asset (such as stock or real estate) for a profit; or when taxpayers receive distributions from a business in excess of their basis. Capital gain is the difference between the amount received and the investor's basis in the asset (usually their original purchase price). Capital gains are taxed up to 20%, with payment due that year. 

Example: Investor A purchased property in 2018 for $1,000,000. If the property is currently worth $2,000,000, there is $1,000,000 existing in capital gains. If Investor A were to sell the property on May 1, 2020 for $2,000,000, they would be taxed $200,000 (20% X $1,000,000) upon sale and owe capital gains tax in 2020. However, if Investor A were to subsequently invest $1,000,000 (an amount equaling their capital gain) into an OZ investment by October 28, 2020 (180 days from sale), they can defer paying capital gains tax until December 31, 2026, save $20,000 on their tax bill, and sell their OZ investment tax-free after ten years.