Investment in Opportunity Zones takes place through investment vehicles called Opportunity Funds which must allocate 90% of their assets into Opportunity Zone property.
The profit from the sale of a capital asset, such as stock, bond or real estate, is a Capital Gain. Investors have the option to roll the capital gain into an Opportunity Fund and potentially enjoy the following benefits:
Tax Deferral: Taxes on the rollover capital gains are deferred until the earlier of the date on which the Opportunity Fund investment is disposed of, or December 31, 2026.
Tax Reduction: If the investor holds the Opportunity Fund investment for 5 years, the taxable capital gain amount is reduced by 10 percent. If the investor holds the Opportunity Fund investment for 7 years, the taxable capital gain amount is reduced by 15 percent.
Tax Exclusion: Any capital gains the Opportunity Fund investment generates is not taxed, as long as the investor holds it for 10 years or more.
Investors who sell assets have 180 days to invest their taxable capital gains into an Opportunity Fund.