Opportunity Zones for Real Estate Investors

Several years after opportunity zone investments were incentivized by the federal government, new opportunities to invest in these areas to reduce current and future tax liability continue to arise.

If you’re an investor who may be facing a capital gains tax liability but doesn’t want to pay the taxes today, keep reading to see how you can not only defer your gains through 2026 but also how you could potentially decrease your tax liability.

One savvy way to help defer your tax liability on capital gains and potentially build passive income streams could be by investing in a qualified opportunity zone.

A qualified opportunity zone (also known as a QOZ) is a program that was established under the Tax Cuts and Jobs Act of 2017 with the idea of providing a tax incentive for real estate investors to invest their money in low-income areas.

What is a Qualified Opportunity Zone?

These funds can use the investors’ money for a variety of reasons, including but not limited to: - Converting vacant homes for single-family rental units - Improving abandoned lots for commercial or residential use

What are Qualified Opportunity Funds?

If investors with gains were to consider investing in a QOF today, then they could still: - Defer their capital gains until December 31, 2026 - Remove any tax liability on capital gains realized from a QOZ if holding for 10+ years

Now is the Time to Consider Investing

Some QOZ pros include: - Tax breaks - Tax deferral - Improves low-income communities Some QOZ cons include: - Illiquid investment (minimum of 5 years) - Many investment options with little oversight

Opportunity Zones: The Pros and Cons

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