Who Can Invest in a Qualified Opportunity Zone

Who Can Invest in a Qualified Opportunity Zone

Qualified opportunity zones represent economic development tools that allow people to invest in different low-income areas of the US. The main aim of these opportunity zones is to encourage economic growth and general well-being in communities with a generally low income per capita (the most distressed communities). The opportunity zones offer many tax advantages to investors. Thousands of qualified opportunity zones are available across the US, and taxpayers are allowed to invest in the zones through what is called a Qualified Opportunity Fund. 

Taxpayers can support the economic growth in these distressed areas and benefit from temporary tax deductions on eligible gains. The low-income communities that qualify as opportunity zones are designated through population census tracts, and the states nominate the assemblies for the designation. That nomination is then certified by the U.S. Department of the Treasury. Online, you can find plenty of valuable information regarding these opportunity zones, as well as many interactive maps with the existing qualified opportunity zones across all 50 states in the US. 

The primary purpose of the tax incentives offered through investing is to encourage economic development and create more jobs in these areas. Investors are allowed to defer tax on the invested gain amounts up until there is an event that terminates the investment. The tax benefits investors receive are directly linked to the length of time that the investor maintains his qualified opportunity fund investment. For example, suppose the investor will hold his investment for a minimum of 5 years. In that case, the qualified opportunity fund basis investment will increase to 10% of the deferred gain. Then, suppose the investor will hold his investment for a minimum of 7 years. In that case, the basis of the investment will increase to 15% of the deferred gain. Investors holding their investments for the last 10 years are eligible to choose based on the qualified opportunity fund to the current market value of the date that the qualified opportunity fund investment is either exchanged or sold 

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