Sponsored Content - Passed as part of the Tax Cuts and Jobs Act in 2017, Opportunity Zones can help stimulate economic growth in over 8700 identified, distressed communities across the US, says Chris Loeffler, CEO & co-founder, Caliber.
Additionally, the bill gives investors special tax incentives to keep their money pumping into these types of alternative US-based investments, rather than seeking out tax-saving opportunities across international borders.
Essentially, the law gives investors the power to take some, or all the capital gains they receive from the sale of their stock, real estate portfolio, business, or other capital assets; and then invest those gains—to defer and reduce their tax liability—into a Qualified Opportunity Zone Fund (QOF).
Three Benefits of Investing into Opportunity Zones
When it comes to investing in a QOF, investors can enjoy numerous beneficial tax advantages, depending on the amount of time they keep their capital gains vested within one. Those benefits include tax deferrals, a step-up in basis opportunities and the elimination of capital tax gains.
1) Tax Deferral
Taxes from the original sale are deferred through December 31, 2026, or when the investment in the Opportunity Zone Fund is sold, whichever is earlier.
2) Step-Up in Basis
If an investment in a QOF is made before the end of 2021, and held for at least five years, investors are then eligible for a step-up in basis of 10%. This means investors only pay tax on 90% of deferred gains when filing their 2026 tax returns.
3) Elimination of Capital-Gains Tax
Additionally, if the QOF is held for at least 10 years, any capital-gain appreciation earned from it is not taxed upon disposition. This is the most significant tax benefit provided by Opportunity Zones.
Bonus Benefit – Helping Afflicted Communities in Dire Need
Opportunity Zone investments help distressed communities to rebuild anew, driving community job growth and helping to stimulate local economies across the US.
Caliber – the Wealth Development Company
Caliber is doing a lot of exciting things to live up to the reputation as “The Wealth Development Company.” We provide key strategic investment opportunities to investors, including our diversified Opportunity Zone Fund.
Specifically, our sponsor entity has completed the equivalent of a mini-IPO via Reg A+, which provides the power of a publicly traded company that oversees Caliber’s funds and manages the fund compliance complexities. Since inception, we have strategically raised capital and deployed proceeds as the economic and investing landscapes dictated, versus a fixed traditional fundraising and deployment strategy.
We believe this has been a vital component of our success, which allows us to pivot at a moment's notice. On behalf of everyone at Caliber, we invite you to learn more about our funds and investment opportunities at www.caliberco.com and www.caliberfunds.co.