About
IRS Opportunity Zone Program
The Opportunity Zone Program, established by the Tax Cuts and Jobs Act in 2017, offers significant tax benefits to investors who invest in certain designated distressed communities known as Opportunity Zones. This program's primary objective is to stimulate economic development and job creation by incentivizing private investments.
Key Benefits:
Temporary deferral of taxes on previously earned capital gains. Investors can place existing assets with accumulated capital gains into Opportunity Funds.
Basis step-up of previously earned capital gains invested. For investments held for longer than 5 years, there's a 10% exclusion of the deferred gain. If held for more than 7 years, the 10% becomes 15%.
A permanent exclusion from taxable income of capital gains. If the investment is held for at least 10 years, and the investor sells their Opportunity Fund investments, they pay no capital gains tax.
These incentives aim to offset the current tax policy's lock-in effect, which discourages investors from moving capital from one investment to another. By incentivizing investors to reinvest their capital gains into Opportunity Funds, the IRS aims to increase the funds available to these distressed communities.
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