The Federal Opportunity Zone (OZ) program provides a federal tax incentive for investors to invest in low-income urban and rural communities through favorable treatment of reinvested capital gains and forgiveness of tax on new capital gains.
- 1. Deferral – No up-front tax bill on the rolled-over capital gain and investors can defer their original tax bill until the earlier of a) December 31, 2026 or b) the sale of the Opportunity Zone investment
2. Reduction of tax on the rolled-over capital gain investment for long-term holding.
3. Tax-free appreciation- If an Opportunity Fund investment is held for ten years, the taxpayer pays no capital gains tax on appreciation.