Investing in an Opportunity Zone yields three types of attractive benefits:
- Capital gains tax deferment
- Capital gains tax reduction or “trimming"
- Capital gains tax elimination
The level of benefit investors can take advantage of depends upon several distinct factors.
Profits from the sale of an existing investment will accrue tax. But using those profits, or capital gains, to reinvest in a qualified Opportunity Zone gives investors a deferment on paying those capital gains taxes, either until that new interest is sold or until the year 2026, whichever comes first.