Opportunity Zones - Taxes - Duval & Stachenfeld OZ Hub Taking OffMay 1, 2021
So it seems like there is a decent chance that the tax on capital gains will swing to 40% from 20%, or something close to that.
So my Opp Zone partners and I were kicking around how this would affect Opportunity Zones, and it is pretty obvious…..
For those who already invested in Opportunity Zones, this is a (moderate) bummer, as they could have sold last year and paid 20% in tax, where now they will have to pay 40% in 2026. Still, those investors will have gotten the deferral benefit until 2026, and either a 10% or 15% reduction in the amount of gain subject to tax, depending on when they invested. Also, happily, the Opportunity Zone brass ring (i.e., no tax on the ten-year deferral) will still be there.
But for those who have not invested in an Opportunity Zone, this makes the investment dramatically more compelling – indeed twice as compelling – as the investor would be forgoing a 40% tax instead of a 20% tax.
Moving on, I foresee an awful lot of dollars moving towards Opportunity Zones, especially if capital gains taxes are raised, so I re-mention our Opportunity Zone HUB as Opportunity Zones continue to be hot, hot, hot. We are thrilled that so many of our clients are doing deals in Opportunity Zones. Many of our clients and other contacts in the real estate world are investing their eligible capital gains in Opportunity Zone transactions. For this reason, we are reminding everyone about our: Opportunity Zone HUB
This is an informal value-add platform whereby we match our clients and friends of the firm with others in the following – super simple – manner:
For example, if you want to invest in Opportunity Zones – for yourself or your clients or friends or colleagues with eligible gains– we will refer you to clients that are trying to put together Opportunity Zone deals. Or, if you have an Opportunity Zone transaction, we will refer you to clients that have eligible gains to invest in Opportunity Zone deals.
Right now, it seems like we have more parties looking for Opportunity Zone deals than parties that have those deals – but that changes back and forth from time to time.
In this regard, if you have interest, please reach out and let me know what type of OZ help you are looking for and copy Kristen McMaster (firstname.lastname@example.org) on your response.
All of this is solely in keeping with our core mission, “To Help Our Clients Grow Their Businesses.”
Finally, I cannot write an article on Opportunity Zones without mentioning my law firm’s leading practice. Our Wizard of OZ, Jessica Millett, continues to be a leader in the Opportunity Zone space and has been advising our clients in this space as the program enters its fourth year. To date, she has been quoted in publications such as Globe Street, Bloomberg, The Commercial Observer, Law360, Tax Notes, and The Wall Street Journal, and she has made numerous presentations to industry groups. Jessica has also been a guest on many opportunity zone podcasts, was a featured author in the book “How To OZ: A guide to Opportunity Zones for investors, developers, and industry professionals,” and was listed as one of the Top 25 Opportunity Zone Influencers by Opportunity Zone Magazine two years in a row.
You can read our latest Opportunity Zone Road Maps here.
Bruce Stachenfeld aka The Real Estate Philosopher™