Monday, May 20, 2019

Opportunity Zones and Capital Gains Relief

Opportunity Zones are called that because they bring financial gain to investors with large capital gains.
While this is not a commission opportunity for licensed agents and brokers, there is a definite "service" opportunity for clients who have recently invested. It costs you nothing to fill in your clients about this opportunity. If you save him or her thousands of dollars they would have otherwise handed over to the IRS, you increase your chances of that client referring business to you.
Let’s show you how this works, and how you can benefit with thousands and thousands of dollars in tax savings.
We start with a couple of “Would You Rather” questions……

Would you rather pay taxes now, or invest your money NOW and push off the taxes until later?

The answer is to invest now. Take out most of your money now, tax free, and only leave a little of your money tied up.

Would you rather pay NO taxes on the new investment OR continue doing what you are doing and pay the taxes?

The answer is “Pay No Taxes”

Welcome to the Tax Cuts & Job Act of 2017. This is the biggest tax reform in years. It’s more innovative program is the Opportunity Zones.

How does this work?

You roll over Capital Gains into an Opportunity Zone Fund. It does not matter how you got the Capital Gain. It could be from the sale of a property, the sale of a business (not just assets), or selling of stock.

The fund must invest the money inside an Opportunity Zone.

By doing so, you PAY NO CAPITAL GAINS TAX NOW. What you are able to do is to defer those taxes for 7 years. Then, you pay them, but with a 15% discount in 2026.

Within 30 months of the time, the money goes into the Fund, although some money can be held in reserve.

There are plenty of Opportunity Zones around the country. In fact, there are more than 8,000 of them. All of them have one thing in common.

They are all underperforming areas, whether they are in metropolitan areas or in the middle of nowhere.
What do you get by investing in an Opportunity Zone?

Once the money is invested, you can do pretty much anything you want with it. This Act was written by people who believe in Capitalism. Let the market do what it does best. Find opportunities and maximize return. Let the government get out of their way.

By investing in these depressed areas, you pay NO Capital Gains taxes on the new investment. You MUST hold the asset for 10 years from the original date, and you MUST substantially improve the asset.

You can’t just park your money there for 10 years.

How does it work?

What you can do is take out the money as long as you continue to own the asset. For example, by refinancing. Once the property improvements you make are done, you can refinance and take your money back out. You are still tax free.

Just to clarify, there are some things you cannot do within an Opportunity Zone. These include not being able to invest in what are considered to be “sin” businesses. These would be gambling establishments, liquor stores, or adult entertainment establishments. You also cannot invest in marijuana distribution establishments.

There is nothing else to it!

Of course, there are a ton of regulations, since this is the IRS.

However, the idea is that you have an incentive to put your money into an economically depressed area. You help make something happen there, and you pay no tax on it.
If you or your client has Capital Gains of six figures from 2018, the "deadline", per the IRS, to secure an Opportunity Zone is June 28, 2019.
The has information about a "ready to go" Opportunity Zone Fund, which saves you time and effort and can get your program started as soon as possible. This also becomes a passive participation, as their people handle the bids, permits, rehab, rentals, and property management.
There is also more info about this on the IRS web site:
Please let me know if you have questions or need more information about this "Opportunity"!