The Opportunity Zone program was created by the passage of the Tax Cuts and Jobs Act in 2017 as part of the Investment in Opportunity section of the legislation. The action intended to encourage investment in economically challenged areas throughout the United States and its territories by designating specific places as Qualified Opportunity Zones. The investments would be spurred by deferral and potential reduction of capital gains for investors who directed their resources to projects in the targeted areas.
In a previous article, we discussed the concept of net investment income tax (NIIT). We outlined the fact that the 3.8% NIIT under the auspices of 26 U.S. Code § 1411 - “Imposition of Tax,” and is applied to net investment income (NII).
Investments in Opportunity Zones (often referred to as QOZ investments or Qualified Opportunity Funds) may offer potential for taxpayers to defer paying taxes on capital gains they have earned, while also seeking to earn more by reinvesting those gains. As a potential additional incentive to consider QOF investments, the program is intended to enhance economic development in lower-income areas.
Qualified Opportunity Funds (QOFs) are the vehicles that investors can use to participate in the Opportunity Zone program, which was created by the 2017 Tax Cuts and Jobs Act (TCJA). Opportunity Zones are federally designated areas in need of economic growth and investment. In exchange for directing investments in the targeted regions, taxpayers can defer and reduce their taxes on invested funds under certain circumstances. Here is how the program works:
The Opportunity Zone program was passed in 2017, as part of the Tax Cuts and Jobs Act. On the federal level, the program has allowed the investment of capital gains from the sale of assets into Qualified Opportunity Funds, or QOFs. These funds, in turn, push the monies toward specific, lower-income areas throughout the United States.
A 1031 exchange is when capital gains taxes might be deferred when used to purchase a like-kind property used for business, trade, or an investment. However, there are a few situations when you might be able to relinquish or purchase a vacation home in a 1031 exchange.
Topic: 1031 Exchange
The year 2021 will be a big year for opportunity zone (OZ) investors, real estate developers, and qualified opportunity zone fund (QOZF) managers. There are a number of deadlines investors should be aware of for 2021.
Since its inclusion as part of the 2017 Tax Cuts and Jobs Act, the Opportunity Zone Program has been discussed and debated for both its benefits and shortcomings. Introduced as a way to funnel private monies into federally designated Qualified Opportunity Zones (QOZs), the program’s goal is to boost economic and business development in lower-income areas. In return, investors receive tax advantages for placing their capital gains into Qualified Opportunity Funds (QOFs).
Yes, a Delaware Statutory Trust, otherwise referred to as a DST, is a legally recognized trust set up to passively invest in commercial real estate. Investors may use DSTs to help manage tax liabilities and purchase fractional interests in commercial real estate that otherwise would have been beyond their purchasing power.
Within the Delaware Statutory Trust structure, there are typically two participants: trustees and beneficiaries. The DST offers management and ownership flexibility, but there are certain duties and obligations that must be fulfilled by each party.