Good news for you, investors: The IRS has updated legislation extending the investment period for Qualified Opportunity Funds.
Qualified Opportunity Funds direct your investments in the form of realized capital gains into Qualified Opportunity Zones and help our most vulnerable communities by reinvigorating businesses, rebuilding infrastructure, and bolstering residents. Economists say U.S. investors have over seven trillion dollars of unrealized capital gains.
Yes – seven trillion.
Any investor who realizes capital gains has 180 days in which to invest such gains into a Qualified Opportunity Fund (QOF) and secure the tax reduction and deferral benefits of such investment.
Now, because of the pandemic, your investment timeline for QOFs has been extended. The 180-day period is pushed back to March 31, 2021 for investors who realized capital gains between October 4, 2019 and October 1, 2020.
Of course, any investors who realized capital gains after October 1, 2020, are still eligible.
Investing in a QOF will enable you to reduce your tax obligation owed on such capital gains by ten percent if you hold your interest in the QOF for at least five years. In addition, if you hold such interest in a QOF through 2026 you won’t have to pay tax on such capital gains until April 2027.
However, your opportunity to reduce your tax burden by ten percent is only available if you invest in a QOF on or prior to December 31, 2021.
This is great news all around: for you as an investor to reap tax breaks, all while making a positive social impact on millions of people living in vulnerable QOZ communities nationwide.
To view the IRS legislation, click here.
For more information and to see what your investment in a QOF can do, visit PHT Opportunity Fund.