Opportunity Zones are a new community development pogram established by Congress in the Tax Cuts and Jobs Act of 2017 to encourage long-term investments in low-income urban and rural communities nationwide. The program provides a tax incentive for investors to re-invest their unrealized capital gains into an OZF (OZ Fund) that is dedicated to investing into OZ designated by the chief executives of every U.S. state and territory. States have designated up to 25% of low-income census tracts as Opportunity Zones. There are 8,761 census tracts that have the OZ designation spread across the country. These tracts have an average poverty rate of 32% compared with the national average of 17%.
Tax reduction solutions for investors and fund managers.
Deferral of Capital Gains Taxes
Capital gains from the sale of any asset (if reinvested within 180 days) are deferred until the sale of the new investment, or December 31, 2026, whichever is earlier*.
Set-up in Basis
Any investment re-invested and held for 5 years gets a tax basis increase of 10%, and any investment held for 7 years gets a tax basis increase of 15% — thereby reducing the original capital gains tax by that amount.
Investments held for 10 years will pay no capital gains tax on the post-acquisition gains. This permanent exclusion only applies to the gains accrued in an Opportunity Fund.
Northern Bank does not provide tax, legal or accounting advice, nor can we make any representations or warranties regarding the tax consequences of your transaction. We strongly encourage you to seek appropriate professional advice regarding your specific facts and circumstance.
Outstanding Customer Service
Every Opportunity Zone Fund customer works with our specialized Relationship Manager to define a solution tailored to your needs. Our banking support team will work closely with your team to develop control and security procedures to help mitigate the risk for your transaction.