Benefits of Opportunity Zone in Real Estate

Opportunity zones offer several benefits to investors. If you are looking to put your money in a project, are interested in tremendous gains, and can wait for years to hold the investment, then a qualified opportunity zone is the best option for you. Here are several of the best benefits that you can expect from this investment project.

Deferral of Taxes

The deferral of taxes on previously gained capital gains is temporary. However, it still delivers significant cost savings for the investors. You can place any existing assets with the original capital gain into a qualified opportunity fund. The capital gains won’t be taxed until the end of 2026, or when you sell the assets off.

Step UP of Capital Gains

Another benefit that you can look forward to is the step-up of any previously earned capital gains that have been invested in an opportunity zones real estate development project. That is, if the investment is held for five years, then you can enjoy a ten percent reduction on the capital gains taxes you’ll pay. If held for seven years, though, you can have 15 percent off the total amount of your capital gains taxes.

Permanent Exclusion of Taxes

If you hold the investment for at least ten years, though, you won’t need to pay any taxes on new gains. Any capital gains generated through the investment of the asset into the qualified opportunity fund or in a qualified opportunity zone property is taxless. This is the biggest benefit for any investor. If you invested a million and if that amount turns to $1.5 million by the end of 2020, the taxes you’ll pay on the capital gains is free.

180-Day Timeline

However, you need to invest within a given timeframe. It must occur within 180 days after the sale of the asset. That is the only way for your assets to be eligible. However, if you defer on recognizing that gain, then that won’t count. And since real estate transactions take time, you’ll need to consider your schedule or talk to the other party about processing the sale. However, in some cases, relief on the investment period has been granted by the IRS. A similar relief might be granted to you. Ask and find out how that can apply in your case.

Investment Group

It’s not easy figuring out which investment projects are worth it. With so many options, your own research might not be enough. You’ll need to know which projects have a high chance of delivering good profit to you. That’s where a real estate investment group comes in. They provide professional help and advice to investors like you. With their guidance, selecting the project and property investment will be much easier.

Selection Process

Be sure to check the credentials of the firm, though, before you make a move. What kind of services do they offer? What is the extent of the help you can receive? You can also ask them for a more in-depth explanation of the tax benefits that opportunity zones offer.