The Tax Cuts and Jobs Act of 2017
The Tax Cuts and Jobs Act of 2017 (TCJA) has provided tax benefits from investing in “Qualified Opportunity Funds.” These funds create a new tax incentive program designed to encourage new investment capital into certain low-income and areas and census tracts throughout the country. They are referred to as Qualified Opportunity Zones. The program enables investors with unrealized capital gains to receive significant tax incentives for investing in these funds.
A Qualified Opportunity Fund is a privately managed investment vehicle, generally formed as a partnership, LLC or a corporation, whose sole purpose of formation is to invest at least 90% of its assets directly invested into a qualified Opportunity Zone property. Our Mobile Home Park development projects are certified as Opportunity Funds.
Qualified Opportunity Zones are designated census tracts or areas. For a census tract to be treated as a Qualified Opportunity Zone, the governor of the respective state must identify such areas or census tracts in writing to the U.S. Treasury Department. The Treasury Department must then certify each designated area as a Qualified Opportunity Zone. Each zone will maintain its designation for 10 years.
If an investor has a short or long-term gain from the sale or exchange of property, and the capital gain is reinvested in a Qualified Opportunity Fund within 180 days of the sale of that property or stocks, the realized gain may be able to be deferred until the earlier of the date of the investment in the Qualified Opportunity Fund is disposed of and or December 31, 2026.
When the investment in the Qualified Opportunity Fund is held for 10 years, the taxpayer will not recognize taxable gain on the appreciation in value of the investment in the Qualified Opportunity Fund.
Check with your CPA to find out how investing in these Qualified Opportunity Funds will impact your investments.
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