How the Opportunity Zones and Qualified Opportunity Fund Can Benefit You & Wisconsin
Have you sold an appreciated asset in the past 180 days, and realized capital gains tax liability as a result? Have you wanted to sell an appreciated asset, but the capital gains tax liability was too cost-prohibitive to do so?
If the appreciated asset is real estate, you may be able to leverage a 1031 exchange to avoid a capital gains tax bill. However, that requires quickly identifying a similar property and reinvesting 100% of the proceeds into the new property. What if the appreciated assets are stocks or bonds or other forms of assets that are subject to capital gains taxes? Well, you likely have to pay the tax collector following any sale…until now.
The federal legislation that authorized Opportunity Zones and Qualified Opportunity Funds really had two beneficiaries in mind: communities in need of greater economic development and you.
Opportunity Zones are federally designated census tracts providing substantial tax-favorable treatment for individual and institutional investors who invest realized capital gains in businesses and properties in those zones for an extended period. The State of Wisconsin passed its own landmark Opportunity Zones legislation effectively doubling the tax benefits for investing in Wisconsin through an eligible fund like Badger State Opportunity Fund.
Investors now can:
Unlock the capital gains in their appreciated assets.
Invest the capital gains through a Qualified Opportunity Fund (think of it as a private equity fund with substantial tax benefits), putting the money to work for several years before paying any capital gains taxes.
Reduce any federal and state capital gains tax liability associated with the initial investments sold.
Pay as little as $0 in capital gains taxes for appreciation related to long-term Opportunity Zones-based investments.
It is a win-win-win! The investor receives extraordinary federal and state tax benefits and the ability to earn a return. Employers and developers gain access to additional capital needed to build quality companies, commercial spaces, and multi-family housing. Individuals and families in neighborhoods benefit from increased jobs, housing, and businesses. Communities and the State of Wisconsin as a whole become even better places to live, work, play, invest, innovate, and thrive.
Wisconsin Diversified Investments, LLC
500 College Ave. Racine, WI 53403
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