The 2017 Tax Cuts and Jobs Act provides a significant opportunity to defer the tax on gain from the sale or exchange of stock and other assets.
If you invest the gain from the sale in a “qualified opportunity fund” within 180 days after the sale, tax on the gain is not due until December 31, 2026 or, if earlier, the date you sell your investment in the fund. In addition, if you don’t sell your investment for ten years, any appreciation in the value of the investment is not taxed at all.
A qualified opportunity fund is an investment vehicle that is organized as a partnership or a corporation to operate a business in designated low-income areas referred to as “opportunity zones.” Several hundred such zones have been designated by the IRS. You don’t need to live in the zone.
You may invest as a passive partner or shareholder in a fund that is organized and run by a third party. Depending on your situation, you may want to form your own fund and manage the fund’s business. Investments received by a fund must generally be used to purchase new property or substantially improve existing property.
Please call our office to discuss how these changes may affect you.