Time is running out for investors in South Florida seeking a tax break by investing in opportunity zones, which allows for investments in lower-income areas to have tax advantages.
The rush is fueling deals as the population continues to grow due to continued migration to South Florida. Developers hope to get deferred taxable gains on projects such as new hotels, branded residential properties and more.
Dec. 31 is the deadline for individual investors seeking qualified opportunity zone investments to help defer taxable gains. Tax benefits in the program include a 10% basis step-up and related gain exclusion. If investors take advantage of the opportunity, they can defer paying capital gains on their investment until Dec. 31, 2026.
Besides the temporary deferral, other advantages include the exclusion of taxable income on new gains on investments held for 10 years or more, and a 10% increase in the investment if the qualified opportunity fund is retained for five years and a 15% increase if the investment is held for seven years.
After the December 31 deadline, the investors have until June 30, 2022, to invest the funds in businesses located in an opportunity zone to comply with the regulations. If they’re not, there’s a small penalty regarding the interest cost.
There are about 8,700 opportunity zones in the country with 123 opportunity zones in South Florida. Miami-Dade has 67, Broward has 30, and Palm Beach County has 26.
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