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Opportunity Zone Timeline and Tax Benefits

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Presentation on theme: "Opportunity Zone Timeline and Tax Benefits"— Presentation transcript:

1 Opportunity Zone Timeline and Tax Benefits
Sale must be treated as capital gain Sell virtually any appreciated capital asset for an otherwise taxable gain. (Special rule for §1231 gains.) Sell Asset Must be treated as capital gain. Show/Hide All Reinvest Gain in Fund 180 days to reinvest (all or part) 180 days to reinvest (all or part) You have 180 days to reinvest all or part of the gain in a qualified Opportunity Zone Fund. The start date for calculating your tax benefits begins on the day you invest in the fund, regardless of when the fund actually invests your assets. After Five Years 10% of reinvested gain excludable 10% of reinvested gain excludable Retain your investment in the fund and after five years you can exclude 10% of the original reinvested gain when it becomes taxable. After Seven Years 15% of reinvested gain excludable 15% of reinvested gain excludable Retain your investment in the fund and after a total of seven years you can exclude 15% of the original reinvested gain (i.e. an additional five percent) when it becomes taxable. Reinvested gain taxed, if still held (100%, 90%, 85%) Reinvested gain taxed, if still held (100%, 90% or 85%) If you haven’t already sold or exchanged your investment, the amount of the underlying/ reinvested gain becomes taxable on December 31, Depending on how long you’ve held the investment, you may be able to exclude 10% or 15% of that gain, leaving 85% or 90% or 100% subject to tax. (Subject to certain inclusion events.) After Ten Years Step up in basis of investment to fair market value Step up in basis of investment to fair market value at sale After 10 years, you can elect to step up your basis in the investment to the fair market value as of the time you sell or exchange it. None of the appreciation on your investment in the fund will be taxable. (Can elect to exclude gain on disposal of Qualified Opportunity Zone Property.) Opportunity Zone designations end Opportunity Zone designations end For tax purposes, all opportunity zone designations end on December 31, After that date, you can no longer make a new investment in an Opportunity Zone Fund to gain the 10-year tax benefit. Deadline for FMV basis election Deadline for FMV basis election You must sell your investment in the Opportunity Zone Fund on or before December 31, After this date you can no longer elect to step up your basis in the investment to its fair market value.


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