Historically, there have not been many opportunities for taxpayers to shield capital gains from federal taxation. In 2017, under President Trump’s bipartisan Tax Cuts & Jobs Act of 2017, that changed.
Included in the legislation is a provision known as Opportunity Zones, a program with the goal of bringing private investment to America’s low income communities. An Opportunity Zone is a low income census tract that has been designated by the federal and state government to qualify for special tax incentives for investors who invest money there. Opportunity Zone (OZ) investments offer both tax deferral and tax exemption. Investors who experience a capital gain can invest their gain in a Qualified Opportunity Fund (QOF) which in turn invests in Opportunity Zones. The tax burden on the original capital gain invested comes due at the end of 2023, so investors can invest their full capital gain until that time. Additionally, when the gain remains invested for a minimum of 10 years, there is no tax on the growth of the investment made over the life of the investment. Learn more about the nuts and bolts of Opportunity Zone investing by downloading our Investor’s Guide to Opportunity Zone Investing.
There is one major deadline to note if you intend to invest a capital gain in an Opportunity Zone: you’ve only got 180 days to make your investment. Let's look at the specifics of the 180 day rule, and what you can do to be prepared to pick the right OZ investment for your investment goals within the time allowed.
Know Your Investment Dates
First of all, if you’ve experienced or are expecting to experience a capital gain, you should take note of the date your capital gain was realized. Generally, you have up to 180 days from the date your gain is realized to make your Opportunity Zone investment in a Qualified Opportunity Fund. Of course, there are some exceptions. Dates and deadlines are more complex to nail down for capital gains made through partnerships and S corporations. For these more complicated transactions, it is best to consult a tax specialist or financial advisor.
It is also important to note, the rule is 180 days and not 6 months.
Utilize OZ FundHub to Prepare for your Opportunity Zone Investment
Whether the clock is already ticking on your 180 day window or if you’re planning for the future, OZ FundHub is your premier resource for Opportunity Zone knowledge. Visit our Learning Center and download our free guides and white papers on OZ investing. Additionally, check out more of our original blog posts to keep up with the latest in ongoing OZ legislation, updates on regional Opportunity Zone developments, stories about how OZ investments are bringing growth and social change to underserved communities, and more. OZ FundHub also has an interactive map where you can visualize where Opportunity Zones are located across the nation.
You can also watch some of our recent OZ FundHub Connect events. These live pitch sessions give Qualified Opportunity Funds the chance to present themselves to potential investors. Learn about planned projects, specific regions that each fund is targeting, by looking at past Connect Day events. Also, if you have any questions for the fund managers, we would be glad to put you in touch with them. Just contact us here with your questions.
OZ FundHub was created to be a neutral marketplace for Opportunity Zone investors to be connected to Qualified Opportunity Funds. To be matched with the perfect QOF that meets your investment goals, check out our Fund Finder. With OZ FundHub, you’ll be ready to make your OZ investment whether you’re already on the clock of your 180 day period or planning for the future.