Looking for a better way to diversify your portfolio?
Buying stocks, bonds, or property aren’t your only options.
Many of today’s top investors are turning to a newer investment strategy: Opportunity Zones. A large portion of Thief River Falls, census tracts 27113090200 and 27113090400, are designated Opportunity Zones.
What is an Opportunity Zone?
To drive economic development in low-income neighborhoods, the Tax Cut and Jobs Act of 2017 (TCJA) created Opportunity Zones (OZ), or “O-Zones” for short.
These areas of the U.S. — both rural and burgeoning lower-income urban communities — have historically been capital-deprived, but have potential for future growth.
In these specially designated areas, qualifying investments receive material tax benefits worth noting.
Why Should You Care About an Opportunity Zone?
Choose Opportunity Zones and you can:
- Re-invest any form of capital gains.
- Defer your taxes on your original capital gain until the end of 2026.
- Reduce your taxes by up to 15% when you invest in an Qualified Opportunity Fund for at least 7 years.
- Completely eliminate the tax on new capital gains from your Qualified Opportunity Fund investment after the 10-year mark.
That means compared to a typical portfolio, you have the potential to double your after-tax profits with a Qualified Opportunity Fund.
What makes a good project?
There are many types of projects that can be eligible Opportunity Zone projects. The primary requirement is that the project must be within a certified Opportunity Zone. Project types can be either new construction on empty land within an Opportunity Zone, or significant rehabilitation (either residential or commercial) of an existing building within an Opportunity Zone. The cost of the rehabilitation must be equal to or greater than the purchase price of the building.