The benefits of investing in an Opportunity Fund are threefold and increase the longer the Fund can hold the investment.
Capital Gains Tax Deferral
When investing capital gains into an Opportunity Fund within a six month period of realizing those gains, the federal taxes on those gains may be deferred as far out as December 2026.
Capital Gains Tax Reduction
Holding the invested gains in that Opportunity Fund for five years or more opens the option for a ten percent reduction of the tax on the invested capital. Keeping it for seven years or more will increase that percentage up to fifteen.
Capital Gains Tax Forgiveness
Investors can eliminate the federal taxes on any gains realized from the Opportunity Fund invested money if the Fund holds the investment for a minimum of ten years.
Ideally, these tax savings can be deployed into other community investments.