OPPORTUNITY ZONE INVESTING
In 2017, federal legislation was passed into law to create “opportunity zones” aimed to promote private capital to be invested in economically distressed areas in return of preferable tax treatment. This new opportunity will help investors shelter capital gains tax and receive tax free growth through the newest investment vehicle from United Investor Services, Corp. – City Station North II, LLC.
How it Works
If a project is developed in a designated Opportunity Zone, and is either a dollar for dollar renovation or a ground up development, the project’s investors are eligible to receive preferential tax treatment. These investments are aimed at benefiting individuals who have earned large capital gains on stock, property or business sales. You are able to roll as much or as little of your gain into a qualified Opportunity Zone Fund and defer the capital gains tax that were initially triggered.
City Station North (Investment available soon)
Investors that reinvest capital gains into an Opportunity Fund project can receive meaningful tax breaks including capital gains deferral, a substantial step up in tax basis, and tax abatement of all post-investment appreciation. Unlike the 1031 exchange program that has long been used to defer real estate-related taxable gains, eligible capital gains are not limited to real estate and can include gains from stocks and business or personal assets. Investments are required to be equity investments in businesses or real estate project located within an Opportunity Zone. City Station North is within an Opportunity Zone in Troy, New York.
Investors may reinvest capital gains from any recently sold investment—including the sale of stocks, bonds, a private business, or real estate—so long as the gains are rolled into a Qualified Opportunity Fund investment within 180 days of the sale. Investors who reinvest capital gains into these funds can receive meaningful tax breaks, as described below. It’s important to note that investments into a Qualified Opportunity Fund do not need to be made solely from capital gains; a fund can pool eligible capital gains and other capital. However, only investments of qualifying capital gains are eligible for the Opportunity Zone tax benefits.
Opportunity Zone Investment Timeline
The Benefits of Opportunity Zone Investing
Opportunity Zone investments offer three unique and compelling tax advantages.
- Defer taxes on capital gains reinvested in a Qualified Opportunity Fund until December 31, 2026 or the date on which the Opportunity Zone investment is disposed of, whichever is earlier.
- Reduce the amount of deferred taxes owed by up to 15%. The basis for capital gains reinvested in a Qualified Opportunity Fund is increased by 10% if the Opportunity Zone investment is held for at least five years, and by an additional 5% if held for at least seven years; as such, the amount of deferred taxes can be reduced by up to 15%.
- Eliminate tax on capital gains from the Qualified Opportunity Fund investment if it is held for at least 10 years.