global Tax Maximize Tax Savings: Take Advantage of Qualified Opportunity Zones Before 2026 October 28, 2024 Time is running out to take advantage of opportunity zones, investors! Here’s what you should know ahead of the QOZ sunset in 2026. There’s still time to maximize tax savings. Investors…have you taken advantage of the opportunity zone program yet? You will want to explore the benefits before the window closes on this tax-friendly program! What is an opportunity zone? Opportunity zones, established under December 2017’s Tax Cuts and Jobs Act (TCJA), are designed to spur economic development and job creation in struggling communities. Governors in every state designate opportunity zones that are deemed economically distressed, so investments in these zones are potentially eligible for preferential tax treatment. If you timely invest capital gains into a qualified opportunity zone fund (QOF), you may be able to defer current capital gains tax and eliminate the tax on the appreciation that would come with the sale of those investments. Key benefits of opportunity zones include: Tax Benefits: Capital gain taxes on qualified investments can be deferred until the end of 2026. This deferral is still a valuable tax planning tool and will allow for additional use of the capital during the remaining deferral period. Most importantly the biggest benefit of the program is still available and requires holding your qualified opportunity zone investment made prior to 2026 for at least 10 years. If the holding periods are met, any appreciation earned during that time will be excluded from capital gains tax upon timely exit from the QOF investment. Community Impact: Beyond tax incentives, investing in opportunity zones helps create jobs, housing, and business activities in underserved areas, benefiting both investors and communities. Sector-Specific Innovations: Some QOFs focus on specific industries or regions, such as the oil and gas sector in Texas, allowing investors to capitalize on industry-specific opportunities while benefiting from the tax incentives. Expiration date approaching Under the TCJA, the opportunity zone program is set to expire on December 31, 2026. New investments of capital gain funds will not qualify for the above tax benefits post 12/31/2026. If you are interested in taking advantage of the remaining window for this beneficial tax incentive, please reach out to us. Have you already invested? What should you do to get the most out of the opportunity zone program? Stay tuned for our upcoming blog where we explore opportunities for investors to maximize tax benefits before the program’s sunset in 2026.
