The Wonderful Wizard of OZ (Opportunity Zones)

How You Can Defer Taxes on Stocks and Invest in Real Estate Tax Free

You may or may not have heard some of the buzz around one piece of the 2017 Tax Cuts & Jobs Act – Qualified Opportunity Zones. But even if you have heard about them, you probably aren’t fully aware of their potential benefit to you. Below are some resources and some basic information about how you can defer taxes on the sale of assets such as stocks, bonds, or even other real estate and invest in Real Estate TAX FREE! Remember, it’s important to consult your CPA or tax attorney whenever you make important tax decisions.

Tax Free You Say?

Yes! If you invest into a QOZ (Qualified Opportunity Zone), and hold the property for at least 10 years, the appreciated gains on the QOZ investment become tax-free income when the investment is sold or exchanged.

What are QOZs?

QOZs are areas designated by local officials as communities that are in the most need of capital injection. Check out this link to an interactive map where you can search across the US for all of the designated areas. Almost all San Diego County QOZ’s are within 25 miles of the US/Mexico border.

What About That Tax Deferral You Mentioned?

The tax deferral portion of the equation gets to be a little bit more complex but it allows you to defer capital gains on stocks and other assets if you invest in a QOZ up until the point when you sell the investment, or December 31, 2026 (whichever comes first)– at which time you still need to pay the tax man. But, if you’ve held the investment for at least 5, or 7 years, you get a 10% or 15% step up on the basis of your initial investment into the QOZ, thereby reducing your taxable gain by the same amount.

Some Examples of Assets You Could Sell.

  • Your primary residence
  • Stocks
  • A business
  • Anything subject to long term capital gains

Want More Information?

Other resources on this topic are:

As always, make sure you seek the advice of your CPA or tax attorney whenever you make any decisions that have tax implications! The Nelson Riddle Team can refer you to either if you need one!