Have you heard of an opportunity zone? If you’re the kind of person who is always searching for the best possible investment opportunities, may be familiar with the term but may not know just how beneficial it can be to you and your community. Check out these details to help you make the right decision on whether these investments are suitable for you:
What is an Opportunity Zone?
The opportunity zone is part of the Tax Cuts and Jobs Act of 2017. One of the most popular aspects of the act provided congressional designation of low-income, disadvantaged communities as “opportunity zones.” These zones are areas that could benefit from investment and revitalization. Opportunity zones real estate is typically run down and far beyond everyday repair but still within the realm of restoration. These communities may have residential properties, business properties, or a combination of both, but they are always economically distressed.
The Benefits of Investing in Opportunity Zones
Why are so many people interested in investing in opportunity zones? It’s not just because of the philanthropic nature of these investments. However, the appeal of knowing that you are part of the effort to restore once-great American communities is undoubtedly undeniable. No, the biggest reason that many investors choose these opportunities is because of the significant tax benefits they offer.
When you part with property or other assets in ways that yield significant capital gains, you are subject to equally major taxation. That taxation can be stressful, especially when you’ve made several substantial sales or seen a lot of capital gains in a single tax year. To avoid this, people often opt for things like a 1031 Exchange, but there are other options. Putting your capital gains directly into opportunity zone funds can shelter them from immediate taxation – and can even protect them from taxation entirely if you own the investment long enough.
During the first five years, you will receive deferred taxation if your capital gains are invested into one of these initiatives. In years five and six, you will receive a ten percent reduction of taxation. Years seven, eight, and nine will offer a fifteen percent reduction in taxation. And in years ten and beyond, you will no longer be subject to taxation on these funds at all. Talk about a big incentive to invest in America’s struggling communities!
How to Invest in Opportunity Zones
So, how do you put your funds toward these opportunity zones? Any financial expert will tell you that the best course of action is to avoid doing so individually. You will be better served by investing in a qualified opportunity fund. These funds are created by companies who help individuals make these investments and pool their resources to protect anyone from losing everything in these often-risky ventures. It’s the best possible way to put your money to work in meaningful ways – and reap the benefits, too!
What are you waiting for? Contact one of these investment companies today and get started investing in these incredible opportunities and making a positive difference in your own life and the lives of those in your community.