Need Help Deciphering Opportunity Zone Tax Benefits

[Sue Hough]

Hello everyone and I hope you are having a wonderful day. I am solidifying a larger residential  development within an Opportunity Zone in eastern Tennessee. Although I understand the premise of this program, I need to understand the specific benefits of this program and how it relates directly to the investors and/or developer.  Thanking you in advance!

[Ashish Acharya]

Originally posted by @Dave Spooner:

@Sue Hough Opportunity Zones offer you the ability to take capital gains and reinvest them to defer and even possibly avoid paying tax on them. For example, if you sold $100k in stocks, normally, you would pay roughly $15k in capital gains tax. Instead, you could reinvest that entire $100k in an Opportunity Zone and avoid the tax.

It's not as simple as just purchasing property in predetermined OZs though. You need to have an Opportunity Zone Fund setup. It can be tricky business, and I highly recommend contacting both a lawyer and CPA that have experience doing this.

For these reasons, while incredibly powerful, Opportunity Zones are only worth pursuing if you have a decent sized capital gains tax you can avoid.

Dave you don’t have to reinvest entire 100k. This is not like 1031 where you have been to reinvest sales proceeds. You can just invest the capital gain tax amount.