Opportunity Zone tax incentives are perhaps the greatest in American history. According to §1400Z-2, taxpayers (individuals or businesses) who sell property with existing capital gains and reinvest into opportunity zone real estate or businesses can defer paying capital gains tax until December 31, 2026, reduce their capital gains tax payment by 10%, and sell their opportunity zone investment tax-free after ten years. Opportunity Zone tax incentives even apply to investments made into businesses located in an opportunity zone. Imagine buying 10,000,000 shares of penny stock in an opportunity zone startup company that becomes the next Amazon. You could buy the Dallas Cowboys with your tax savings.
Example: Assume an investor sells investment property and recognizes $1,000,000 in capital gains. If the investor reinvests the $1,000,000 into an opportunity zone investment, they wouldn't have to pay capital gains tax until December 31, 2026, and save $20,000. If 10 years later the opportunity zone investment increases in value to $3,000,000, the investor can sell their opportunity zone investment tax-free, saving $400,000 in capital gains tax ($2,000,000 * 20%).
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