What Are Opportunity Zones?

Opportunity Zones are census tracts composed of economically distressed communities that qualify for the Opportunity Zone program, according to criteria outlined in 2017’s Tax Cuts and Jobs Act. The designation of Opportunity Zones is designed to help spur development of identified communities. In exchange for investing in these areas, investors can access capital gains tax incentives available exclusively through the Opportunity Zone program.

To access these tax benefits, investors must invest in Opportunity Zones specifically through Opportunity Funds.

Various zones are designated within specific census tracts in San Diego. Contact us for more information about investment qualifications.

Tax Advantages

In exchange for following the rules of the Opportunity Zone program and investing in Qualified Opportunity Zones through Qualified Opportunity Funds, investors can receive substantial capital gain tax incentives immediately and over the long term.

Those who invest realized capital gains into a Qualified Opportunity Fund can defer paying capital gains tax for those earnings until April 2027 for investments held through December 31, 2026. Gains must be invested in a Qualified Opportunity Fund within 180 days in order to qualify for any tax treatment available under the Opportunity Fund program.

Those who hold their Opportunity Fund investments for at least five years prior to December 31, 2026 can reduce their liability on the deferred capital gain principal invested in the Opportunity Fund by 10%. If the investment is held for a minimum of seven years prior to December 31, 2026, the tax liability can be reduced by 15% total.
Those who hold their Opportunity Fund investment for at least 10 years can expect to pay no capital gains taxes on any appreciation in their Opportunity Fund investment. That’s because Opportunity Fund gains earned from Opportunity Zone investments can qualify for permanent exclusion from the capital gains tax if the investment if held for at least 10 years.

As an example, here is a timeline of benefits investors can expect to receive who invested in 2018:

Estimated After-Tax Returns on Capital Gains Investment of $250,000:

Assumes 5% Annual Return on Investment

We hope this brief introduction was informative

Please feel free to contact us if you are interested in exploring this exciting new opportunity