Basics of Opportunity Zones in Auburn and Opelika | Kathy Overfelt and Tony Overfelt

Basics of Opportunity Zones

Want to sell assets like stocks, bonds, real estate, etc. and take profits BUT anxious about the tax burden? 

Heard about opportunity zones and opportunity funds but have questions about how they work?

Opportunity Zones were added to the tax code by the Tax Cuts and Jobs Act on December 22, 2017. A Qualified Opportunity Zone is a designated census tract where new investments made through a Qualified Opportunity Fund and meeting certain IRS conditions, are eligible for preferential tax treatment.

Opportunity Zones in Alabama were nominated by Governor Kay Ivey and approved by the U.S. Treasury and IRS on April 18, 2018. See here.



A Qualified Opportunity Fund is an investment vehicle that is set up as either a partnership or corporation for investing in eligible property (real estate or operating businesses) located in a Qualified Opportunity Zone.

NOTE:  The structure of the Opportunity Fund, the nature of the investments and their timing are critical for IRS compliance. Investors should seek guidance from specialized accountants and attorneys.



Capital gains invested in a qualified Opportunity Fund within 6 months offer investors 3 incentives:

1)  DEFER TAXES:  Capital gains taxes are deferred until 2026. Taxes on the original capital gains investment are due when the investment is sold or 2026, whichever is earlier.

2)  REDUCE TAXES:  The deferred tax liability is reduced by 10% if the investment is held for 5 years and reduced another 5% if held for 7 years. 

3)  ELIMINATE TAXES:  If the investor is patient and leaves the investment in the qualified Opportunity Fund for 10 years, then ALL appreciation of the original investment is tax exempt.

 Interested in learning more about Opportunity Zones in the Auburn and Opelika area? Send us an e-mail.