Q: I read that the new opportunity zones allow investors to avoid paying capital gains taxes-how are opportunity zones different from 1031 exchanges? Eugene, Cleveland, OH A: 1031 exchanges require an intermediary to hold onto proceeds that result from the sale of property while the seller lines up another investment, whereas funds invested in opportunity zones don’t need to be kept separate–investors just have to file Form 8949 with their income taxes. Another difference between opportunity zones and 1031 exchanges, which allow real estate investors to defer taxes on capital gains from the sale of property by reinvesting the proceeds from the sale into another property within 180 days is that 1031 exchanges don’t allow investors to permanently exclude profit […]
continue reading Q: Are there any new real estate opportunities to look for this year? Mitch, Succasunna, NJ A: New Code Section 1400Z, added by the new tax bill offers specific tax benefits to investors that invest in certain designated low income communities called Opportunity Zones including: Temporary Deferral of Capital Gains Tax Step-up in basis on deferred gain (up to 15%) Election to permanently exclude capital gain A list of all 8700+ Opportunity Zones can be found on the Department of Treasury Website. All the details have not yet all been fleshed out, but hopefully there will be more guidance issued later this year. For more real estate information and tips visit my blog at geraldlucas.com.
continue reading