What is an Opportunity Fund?
Opportunity Funds are a new investment that receives preferencial tax treatment. Created by the Tax Cuts and Jobs Act of 2017, they incentivize investment in targeted census tracts called Opportunity Zones.
What Are Opportunity Zones?
Opportunity Zones are communities designated by state and federal governments, targeted regions where officials seek to spur economic development.
Why Invest in Opportunity Funds?
Opportunity Funds allow investors to (1) pay zero federal taxes on profits from an Opportunity Fund if held for 10 years and (2) defer federal taxes on any current capital gain taxes until 2027 while reducing that tax payment by 10%.
If a long term sale results in $1,000,000 profit and $238,000 federal capital gain taxes (23.8%), invest all of the $1,000,000 gain into an Opportunity Fund. Assuming an annual return rate of 9% simple, the post-tax value of the investment after 10 years is $1,900,000. The investor pays zero federal taxes on this gain. The only tax liability is $214,200, deferred until 2027 and a 10% reduced amount, from what would have currently been paid. As a result, post-tax earnings are more than double had they invested elsewhere.
(Stocks, Bonds, etc)
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Opportunity Zone Investment Guide
Learn about our offering and get an
overview of the Opportunity Zone Program with this guide.
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