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1 of 3 Opportunity Zone Tax Breaks Ends Dec. 31

A 10% capital-gains tax reduction for properties owned at least five years expires on Dec. 31 since future purchases won’t qualify for the five-year time minimum.

CHICAGO – Origin Investments says it expects an investment surge in qualified Opportunity Zones (QOZ) through the end of the year because one of the tax breaks will no longer apply to purchases in 2022 or later.

“Investor appetite in opportunity zones has accelerated significantly this year for many reasons, but the biggest wave is about to come as the bonus tax reduction on deferred capital gains comes to an end on Dec. 31,” says Origin Co-CEO Michael Episcope.”

Under the expiring benefit, investors can reduce their capital gains tax liability if they hold a QOZ property for five years. However, that benefit expires on Dec. 31, 2026, and investments after Dec. 31, 2021, won’t make the five-year qualification.

Episcope lists three benefits to investing before New Year’s Day:

  • Capital gains tax liability can be deferred until Dec. 31, 2026
  • Tax liability on those original gains can be reduced by 10%
  • Investors can eliminate taxes on any capital gains realized from the QOZ investment after a 10-year holding period

“Investments in QOZ offerings can be made after Dec. 31, but they will not meet the five-year hold requirement prior to Dec. 31, 2026,” adds Origin General Counsel Michael McVickar, which means they won’t “receive the 10% reduction in their capital gains tax basis.”

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