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For investors, opportunity areas have several tax advantages. Capital gains invested in a Certified Opportunity Zone Fund will not be taxed by the end of 2026 or upon the sale of the investment, whichever comes first. Any capital gains from the fund are permanently free of any tax if the investment is held for 10 years. In addition, the initial investment will be discounted up to 15% on a tax basis after seven years.
The directives arrive a few weeks before the mid-term elections. The GOP struggled to sell its tax legislation to voters while the party is trying to retain its majority in the House.
The proposed Regulations clarify that only capital gains qualify for preferential tax treatment. Investors who can participate include individuals, corporations, businesses, REITs, estates and trusts. Treasury said additional guidelines would be issued before the end of the year and the final rules should be adopted in the spring.
"We felt that it was important to publish the basic guidelines needed to set up the funds and not wait for all issues to be resolved," said a top Treasury official who declined to 39 to be appointed.
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