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Roll over capital gains, don't pay tax on them until 12/31/2026.
Hold for 7+ years, and reduce the deferred tax you owe by 10%.
Pay $0 in taxes on an Opportunity Fund held for 10+ years.
When Amazon hits $2,000 per share, John decides to sell the 600 shares he purchased back in 2015. The sale results in a $1 million profit and $238,000 in federal tax liability. Instead of paying $238,000 in federal taxes on this sale, John invests his $1 million gain into a real estate Opportunity Fund targeting workforce housing in Opportunity Zones. Assuming an annual return rate of approximately 8.5%, the post-tax value of his investment in 2028 - after a 10-year hold - is $2 million. John’s post-tax earnings are more double than if he had invested elsewhere.
Breakdown of Key Investor Tax Benefits
Investing $1 million in pre-tax dollars instead of the $762,000 in post-tax dollars that would have been available for another type of investment.
Paying $210,178 in taxes (10% reduction) on December 31, 2026 instead of paying $238,000 in 2018.
Owing no additional federal capital gains tax on the $1 million in capital gains on the Opportunity Fund investment when it is sold after 10 years.