Contact us at 504-684-4500 or info@norf.build
.png)
Qualified
Opportunity Zones
WHAT ARE THEY?
The Tax Cuts and Jobs Act of 2017 provides tax incentives for individuals to invest capital gain proceeds into specially created Qualified Opportunity Zone Funds that invest in geographic districts designated as Qualified Opportunity Zones.
"I really think this has tremendous potential to have a lasting impact in some of our country's most distressed communities."
- Lisa Starczewski, co-chair of the Opportunity Zones Team & Tax Section for law firm Buchanan, Ingersoll & Rooney
WHAT ARE THE TAX ADVANTAGES?
1
GAIN DEFERRAL
Capital gain proceeds invested in a Qualified Opportunity Zone Fund are exempt from tax until 12/31/2026.
2
TAX-REDUCTION
Capital gain proceeds held in a Qualified Opportunity Zone Fund for 5 years will receive a 10% reduction of their original tax basis.
3
TAX-FREE GROWTH
For investments held 10 years in a Qualified Opportunity Zone Fund, all fund appreciation is permanently tax free.
ENHANCES RETURNS & PROTECTS AGAINST RISING TAX RATES
Traditional Investment
QOZ Investment
Invested Capital Gains
Less: Capital Gains Tax Due
After-Tax Investment
Year 10 Value
Less: Assumed Final Cap Gains Rate of 25%
Year 10 After-Tax Value
Less: Cap Gains Tax on Initial Investment due
12/31/26
Total Year 10 After-Tax Net Gain
Year 10 After-Tax Value
$1,000,000
($200,000)
$800,000
$2,074,994
($318,749)
$1,756,245
-
$756,245
$1,756,245
$1,000,000
-
$1,000,000
$2,593,742
-
$2,593,742
($225,000)
$1,368,742
$2,368,742
Due soley to tax incentives, a $1 Million investment in a Qualified Opportunity Zone Fund would net a 1.34x higher post-tax return.
*Assumes investment is held for at least 10 years and a 10% step-up in basis is applied to the original capital gain that was invested.
**Assumes 10-year holding periods and annual appreciation of 10%.
***The amounts shown are not net of fees and carry in either the traditional investment or the QOZ investment. This is to illustrate the tax benefits of QOZ investments prior to any fee structures.
WHO ARE QUALIFIED OPPORTUNITY ZONES FOR?
Qualified Opportunity Zone Funds can be a great choice for investors who have realized or unrealized capital gains including the sale of stock, bonds, real estate, businesses, or even bitcoins, and would like to defer and potentially eliminate some or all of their taxes due. Actively managed QOZ funds allow investors to passively benefit from real estate investments so they may focus on other endeavors. Qualified Opportunity Zones were designed to spur investment into communities of greatest need and to create lasting positive change.
