How Does the Tax Incentive Work?
  • Temporary tax deferral of eligible gain: Investors may defer capital gains on income reinvested into Opportunity Funds. The deferred gain must be recognized when the investor exits the fund or on December 31, 2026.
  • Step-Up in basis. If the investor remains within an Opportunity Fund for at least five years, their tax liabilities related to the original capital gains are reduced by 10 percent. If the investment is held in an Opportunity Fund for seven years, this increases by an additional 5 percent, meaning that investors can reduce capital gains liability by 15 percent total.
  • Permanent exclusion of fund gains. If an investor keeps the investment in an Opportunity Fund for ten years, any gains from the Opportunity Fund are exempt from taxation.

Show All Answers

1. How Does Someone Invest in an Opportunity Zone?
2. How Does the Tax Incentive Work?
3. How is an Opportunity Zone Tract Chosen?
4. What Assets are Eligible for Investment?
5. What is an Opportunity Zone?