Opportunity Zone Tax Calculator
Calculate your tax savings by investing capital gains in Qualified Opportunity Funds. Defer taxes until 2026 and eliminate taxes on investment growth after 10 years.
Investment Details
Tax Rates
Expected Returns
Tax Savings Analysis
Understanding Opportunity Zone Investments
Opportunity Zones are economically distressed communities where new investments may be eligible for preferential tax treatment. Created by the Tax Cuts and Jobs Act of 2017, this program incentivizes long-term investments in low-income communities throughout the nation.
Three Key Tax Benefits
1. Tax Deferral
Capital gains invested in a Qualified Opportunity Fund (QOF) within 180 days are deferred until December 31, 2026, or when the investment is sold, whichever comes first.
2. Basis Step-Up (Expired)
Previously, investors could receive a 10-15% reduction in taxable gain. This benefit expired on December 31, 2021, and is no longer available for new investments.
3. Tax-Free Growth
After holding the QOF investment for 10 years, any appreciation is completely tax-free when sold. This is the most valuable benefit of the program.
Eligible Gains
- Capital gains from stocks, bonds, real estate, or business sales
- Section 1231 gains from business property
- Capital gain dividends
- Net composite gain from partnerships or S corporations
- Gains must be recognized before January 1, 2027
Investment Requirements
- 180-Day Rule: Gains must be invested in a QOF within 180 days of realization
- Equity Investment: Must be an equity interest in the QOF (not debt)
- Minimum Investment: Only the gain amount needs to be invested, not the entire proceeds
- QOF Requirements: Fund must invest at least 90% of assets in Opportunity Zone property
Important Dates and Deadlines
Current Program Status (2024)
- Basis step-up benefits have expired (ended December 31, 2021)
- Tax deferral benefit ends December 31, 2026
- Deferred taxes due April 15, 2027
- 10-year tax-free exit benefit remains available
- New investments must be in gains recognized before January 1, 2027
Investment Strategies
- Maximize Deferral Period: Invest early in the tax year to maximize deferral time
- High-Growth Investments: Focus on investments with strong appreciation potential
- Diversification: Consider multiple QOFs to spread risk
- Exit Planning: Plan to hold for at least 10 years to maximize benefits
- Professional Advice: Consult tax professionals for complex situations
Common Mistakes to Avoid
- Missing the 180-day investment deadline
- Investing in non-qualified funds
- Selling before the 10-year holding period
- Not properly electing deferral on tax returns
- Forgetting about state tax implications
- Not planning for the 2027 tax payment