Investors can get big tax breaks if they invest in ‘opportunity zones’ under new Treasury rules

by jakewins

The Treasury Department on Friday outlined rules for investors seeking to finance development in under-served regions in exchange for significant tax breaks.

The opportunity zones come with several tax advantages. Capital gains placed in a certified opportunity zone fund will not be taxed through the end of 2026 or when the investment is sold, whichever comes first.

Investors who can participate include individuals, corporations, businesses, REITs, and estates and trusts.

www.cnbc.com/2018/10/19/investors-can-get-tax-breaks-for-investing-in-opportunity-zones-treasury.html

Capitol Investment CEO: Opportunity zone investments could transform low-income communities from CNBC.

Looks like the details are still being worked out, but it seems the basic idea is this:

– Some census tracts with high poverty rates have been deemed “Opportunity Zones”

– If you have an asset that will yield high capital gains (say, stock options), you can invest in these zones and avoid the capital gains tax

– Your investment must grow in basis by 100% in the first 30 months; meaning, you need to do something like refurbish a home, buy an empty lot and build a hydroponic greenhouse or something like that

– The asset must be physically located in the area, other conditions to ensure the money goes to the actual area apply

– You must remain invested for 10 years

– More details to follow from feds, but something like the above, and you don’t have to pay those original capital gains (I *think*; I don’t know if you have to pay capital gains on the investment itself)

Good discussion here: news.ycombinator.com/item?id=18252582

Treasury details here: www.cdfifund.gov/Pages/Opportunity-Zones.aspx

 

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