Can you use Opportunity Zone funds to grow your business?
Opportunity Zones were created to unleash capital locked in highly appreciated assets for investment in low-income census tracts that could help these communities grow. The new federal tax law created significant tax advantages for Opportunity Zone investors. On January 1, the Iowa Tax Code also began recognizing the deferral of gains into Qualified Opportunity Zone funds.
Opportunity Zones are currently located in 44 Iowa communities.
Capital investments in Opportunity Zones provide potentially higher after-tax internal rates of return on new investments. This is accomplished through temporary deferral of capital gains invested in Opportunity Zone funds, partial exclusion of deferred gains over the first five to seven years, and tax-free appreciation on investments held for 10 years or more.
Opportunity Zone benefits can be combined with and complement other local, state and federal tax incentives, as well as non-Opportunity Zone funding sources.
While Opportunity Zone benefits can be significant and attractive for high net worth taxpayers, critical compliance and timing expertise is required.
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