One of the least talked about provisions in the 2017 Tax Cut and Jobs Act is the “Qualified Opportunity Zone” program. In short, the program encourages new community and economic development in certain low-income areas in each state. It accomplishes this by attracting investors with recently realized capital gains to invest in these areas in return for a reduction in their taxes. Essentially, you become a venture capitalist in a low-income area in your community.
Typically, an investor with a large, short-term capital gain might have to pay 35% or more in taxes on the gain leaving 65% for future investment. However, an opportunity zone project allows you to invest 100% of the gain. It effectively defers the tax owed for years and, in some cases, could eliminate it altogether.
Like any investment, it is not without its risks. It is possible that you could lose some, if not, all the original investment. Any investor should proceed with caution and do your homework. This includes not only researching the fund you invest in but also to ensure the tax benefits mentioned will apply to you.
This investment offers the potential for considerable upside, but it has an above-average amount of complexity and risk so seek guidance from a professional before finalizing any decisions.
To learn more about these opportunities in the Atlanta area, see the following link with more details: https://www.investatlanta.com/federal-opportunity-zones