Opportunity zones were added to the tax code by the Tax Cuts and Jobs Act on December 22, 2017.
Opportunity zones are designed to inspire economic development by providing tax benefits to real estate investors. Investors can defer tax on any prior gains invested in a Qualified Opportunity Fund (QOF) until the earlier of the date on which the investment in a QOF is sold or exchanged, or December 31, 2026. If the QOF investment is held for longer than 5 years, there is a 10% exclusion of the deferred gain. If the investment is held for more than 7 years, the 10% becomes 15% of the deferred gain. Second, if the investor holds the investment in the Opportunity Fund for at least ten years, the investor is eligible for an increase on the basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged.
All information above is deemed accurate according to the IRS.gov website. To learn more about Opportunity Zones, visit irs.gov/newsroom/opportunity-zones-frequently-asked-questions.
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