Opportunity Zones- How does it work?

Question

Can someone help explain the new Opportunity zones in the US, how to find them and how they help the investors?

Thanks so much BP community, you all rock! I wish you all health and happiness during these times.

David M. · Answer

@Nick Troutman

If you Google it, you can find the online maps to see which areas are Opportunity Zones.  Here is the FAQ from my State's website:    https://nj.gov/governor/njopportunityzones/faqs/index.shtmlBasically, if you buy a property in the zone, make a Federal IRS declaration (basically file a form), you can get tax benefits.  One significant catch is you need to improve the property the equivalent of the acquisition price.  That is, if you purchase a property for $100k you have to spend $100k in improvements.  Here how the tax benefits work out in summary (taken from above website)

• Reinvested capital gains are deferred from taxation until exit from a Qualified Opportunity Fund or December 31, 2026, whichever comes first.
• The original capital gains reinvested in Qualified Opportunity Fund investments held for the long term receive a reduction in capital gains tax liability, discounted by 10% at the 5-year mark and by an additional 5% at the 7-year mark.
• Any new gains from Qualified Opportunity Fund investments held for at least 10 years are permanently excluded from the capital gains tax. These Fund investments can be held through as late as 2047 without losing tax benefits.

That's the short of it.

Nick Troutman · Answer

@David M. Thanks so very much for explaining this.