Tax Deductions… Can Also Be Investments?

Tax Deductions… Can Also Be Investments?

If you want a way to invest your money and also attain tax deductions (talk about a great return on investment), then this article is for you. Here we’ll talk about something called Qualified Opportunity Zones (hereafter referred to as QO zones) a.k.a. your way to save money and invest money at the same time.

What are QO zones?

These were created with the Tax Cuts and Jobs Act (TCJA), and are for the purpose of attracting investment in low income areas. These are areas who are experiencing uneven economic development relative to their state, resulting in underdeveloped areas. For a list of QO zones, check out this article.

The government requires you invest through a QO fund in order to get the tax benefit. These funds need to be invested in at least 90% QO zones in order to qualify.

What Are The Tax Deductions I Can Receive?

The tax deductions you can receive show up in (essentially) one of two ways:

  • 1) You can rollover profits from a sale of an asset (doesn’t need to be QO fund) into a QO fund within 180 days post sale to deffer the capital gains taxes on the profits.
  • 2) You can hold your investment in the QO fund, and your tax benefits increase with time. You get a 10% tax deduction for holding the investment for 5 years. This increases to 15% after you’ve been invested for 7 years. After you’ve been invested for 10 years you gain a total exclusion from capital gains taxes (only applies to gains accrued after investment in the QO fund).

Need Help Figuring Out How To Get Involved?

This may seem a little complex, but we can break it down for you. We are happy to have a chat face to face or over the phone about your investment opportunities. Please give us a call and we’ll walk you through what to do!


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