Unlock Tax Benefits with Opportunity Zone Investing for Long-Term Gains

Opportunity Zone legislation provides tax benefits for investments made in Opportunity Zone funds before the end of 2026 but still has continuing benefits moving forward. The tax benefits can be substantial for persons with a long-term investing focus. The Opportunity Zone program was created as part of the Tax Cuts and Jobs Act of 2017. Opportunity Zones are designed to spur economic development in underserved communities. By investing in these zones, investors can potentially contribute to community growth while potentially reaping significant financial rewards.

Qualifying investments in an Opportunity Zone Fund include stocks, real estate, small businesses, securities, and other assets as defined by Internal Revenue Code Section 1400-Z. The U.S. Treasury Department determines the eligibility criteria for Opportunity Zone Funds. Opportunity Zones are assigned by census tract. The funds raised from Opportunity Zone investments must increase employment, stimulate economic growth, and support businesses in the designated zone.

The primary tax benefits from this program are the deferral and/or reduction of capital gains tax for assets invested in the zone funds and the exclusion from taxation of capital gains from the sale of assets invested in the funds for at least ten years. Legislation in the House of Representatives has been proposed to extend the program, but it has not advanced since its introduction in September 2023 (H.R. 5761). The benefits of paying a 0% tax rate on capital gains derived from investments in an Opportunity Zone Fund can make sense to persons who pick the right investments and can invest for ten years. Although the program expires at the end of 2026, the 0% capital gain benefits will continue for those investments held through the ten years, provided the investments were made before the expiration date. 

The Department of Housing and Urban Development has published a map of all the Opportunity Zones at the following link: https://opportunityzones.hud.gov/resources/map.

For more information, see:

• https://www.kiplinger.com/taxes/reasons-to-tap-opportunity-zones-before-they-expire

• https://www.law.cornell.edu/uscode/text/26/subtitle-A/chapter-1/subchapter-Z

• https://www.wealthmanagement.com/alternative-investments/opportunity-zone-extension-likely-hold-until-2025

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Fulcrum Wealth Advisors, LLC Branch Address: 10940 NE 33rd PL., Suite 210 Bellevue, WA 98004 Branch Phone: 877-400-0260

Investing in opportunity zone funds is subject to risk and loss of principal.  There is no assurance or certainty that any investment strategy will successfully meet its objectives. Investors should consider the investment objectives, risks and charges, and funds' expenses before investing. 

An ESG investment strategy limits the types and number of investment opportunities available to it, and as a result, it may underperform other funds that do not have an ESG focus. Companies selected for inclusion in a strategy may not always exhibit favorable ESG characteristics and may shift into and out of favor depending on market and economic conditions.

Always consult with a tax or legal advisor for a comprehensive review of your personal situation. Neither Cetera Advisor Networks LLC nor its representatives may give legal or tax advice.