The main tax benefit available for investors of opportunity zones new york is the deferred tax payments on capital gains that are realized from prior investments. For example, if an investor decides to allocate their gains from a prior investment into a Qualified Opportunity Zone (within up to 6 months from the last sale!), the investor is eligible for deferred tax payments on the gain up until the fund is sold (or up until Dec31, 2026).
In case investors hold on to their investments in qualified zones for up to 5 years minimum, they can also further benefit from tax deductions.
- Qualified opportunity funds held for a period of minimum 5 years will benefit from 10% exclusion of the deferred gain
- Qualified opportunity zones held for a period of minimum 7 years, will benefit from an exclusion of 15% of the deferred gain
- Investors holding their investments in Qualified Opportunity zones new york for minimum 10 years will be eligible for an adjustment to the cost basis of the investment
Certainly, the tax advantages that are associated with opportunity zones investments are definitely worth it. However, funding, eligibility and timing are all factors that play a role in the complexity of the entire business. This is why you should talk to an expert such as an attorney or a tax expert who can explain to you everything in detail. There are experts who specialize in these types of investment modules and they can reveal to you a host of other tax benefits that you could enjoy through the low income tax credit program, installment sales, new markets tax credits and many others.
It is important to mention that qualified opportunity funds can make investments in businesses but also in real estate available in these areas. So again, an attorney or a tax expert can help you select the best investment method tailored to your needs and availability. For example, the investments of real estate within an opportunity fund must be greatly improved or new. Buying existent real estate without making substantial improvements in not allowed. This is why you need a more thorough understanding of how the program works- so that you can keep your investments as safe as possible.