Qualified Opportunity Zone Investment
What is the big deal about being a “Qualified Opportunity Zone Investment”?
If you have capital gains (from the sale of real estate, stocks, bonds, crypto, art etc,) you can invest Gains from the sale, to be rolled into an Opportunity Zone investment. Investors only have to reinvest the gains instead of the entire proceeds from the sale of an asset to take advantage of the tax benefits. By doing so, you defer paying capital gains on your original investment (normally 23.8%) for almost a decade.
Puerto Rico – Qualified Opportunity Zone
If you have generated a substantial capital gain from your investments in 2018 – congratulations!
However, you may also be dreading the huge tax bill that’s coming your way.
The good news is that the introduction of Opportunity Zones by the Tax Cuts and Jobs Act in December 2017 can provide you with the perfect investment vehicle to defer that capital gain tax while using the funds from such gain to invest in high-growth opportunities.
How it Works
1. You sell your asset and realize a capital gain.
2. Within 180 days, you invest some or all of your gains into an Opportunity Zone Investment.
3. You defer paying tax on the initial capital gain until Dec 31, 2026. And even then, you get a 15% discount on that tax.
4. If you hold that investment for 10 years, any capital gains you earn from the opportunity zone fund are TAX-FREE.
We’re proud to announce our equity #crowdfunding campaign is live on #StartEngine! Have you considered #investing? Click on our campaign page to learn about your opportunity to invest in this qualified Opportunity Zone Investment: https://www.startengine.com/fusionfarms.
Fusion Farms is an SEC Registered Title III – Regulation Crowdfunding Campaign and is actively accepting investments. https://bit.ly/2Wk2PhM
Every dollar makes a difference!
As noted on the Grant Thornton April 18, 2018 Tax Alert, Puerto Rico was designated as a Qualified Opportunity Zone under the U.S. Tax Cuts and Job Act of 2017 (the “Act”). By providing for short- and long-term capital gains tax deferral and the potential for significant step-up in basis, the Act aims to spur long-term investments in low-income urban and rural communities throughout the U.S. and Puerto Rico by investing in a qualified opportunity fund.
What are the benefits of investing in a Qualified Opportunity Zone?
Investors “can defer tax on any prior gains invested in a Qualified Opportunity Fund (QOF) until the earlier of the date on which the investment in a QOF is sold or exchanged, or December 31, 2026,” according to the Internal Revenue Service (IRS). “If the QOF investment is held for longer than 5 years, there is a 10% exclusion of the deferred gain. If held for more than 7 years, the 10% becomes 15%.”
In addition, if the investor holds the investment in the Opportunity Fund for at least 10 years, the investor is eligible for “an increase in basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged,” the IRS explains on its website.
What constitutes a Qualified Opportunity Zone Property?
Pursuant to Section 1400Z-.2(d)(2) of the Code, there are three (3) kinds of Qualified Opportunity Zone Property:
- Qualified Opportunity Zone Stock
Stock that is acquired by a Fund after December 31, 2017, at its original issue from a Qualified Opportunity Zone Business solely in exchange for cash. Moreover, the corporation must qualify as a qualified opportunity zone business during substantially all of the Fund’s stock holding period.
- Qualified Opportunity Zone Partnership Interest
Partnership interest that is acquired by a Fund after December 31, 2017 at its original issue from a Qualified Opportunity Zone Business solely in exchange for cash. Moreover, the partnership must qualify as a qualified opportunity zone business during substantially all of the Fund’s partnership interest holding period.
- Qualified Opportunity Zone Business Property
Namely, tangible property employed in the trade or business that is acquired by a Fund after December 31, 2017 and it is either first put in use by the Fund or substantially improved by it. It is important that during substantially all of the Fund’s property holding period, substantially all of the use of the property is within a qualified opportunity zone.
What is a Qualified Opportunity Zone Business?
According to Section 1400Z-2(d)(3), a Qualified Opportunity Zone Business is any a trade or business in which substantially all of its tangible property –be it owned or leased – is qualified opportunity zone business property. Furthermore, the Qualified Opportunity Zone Business must comply with the following:
- at least fifty percent (50%) of its total gross income must be derived from the active conduct of a qualified business within a Qualified Opportunity Zone;
- a substantial portion of the business’ intangible property must be used in the active conduct of a qualified business within a Qualified Opportunity Zone;
- less than five percent (5%) of the average of the aggregate unadjusted bases of the business’ property must be attributable to non-qualified financial property; and
- the business cannot be a private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack or other facility used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises.
What are the benefits of investing in a Qualified Opportunity Zone Investment?
As noted above, the aim of this Qualified Opportunity Investment program is getting investors to inject much-needed capital into low-income communities to foster long-term economic growth. In exchange for this capital influx, investors will receive a series of fiscal benefits, such as: (i) tax deferral on the capital gain derived from their investment in the qualified opportunity fund until December 31, 2026 or the disposition of the qualified opportunity fund, whichever event comes first; (ii) up to fifteen percent (15%) increase to the investors’ tax base, thus reducing the taxable gain, and (iii) the potential exemption from tax on the disposition of the investment, if it is held for ten (10) years or more.
Investing in the Qualified Opportunity Zone Investment:
We have established Fusion Farms as a qualified Opportunity Zone Investment.
If you’d like to learn more or discuss specific ways to invest in the Fusion Opportunity Zone Fund, please contact CEO@FusionFarmsPR.com.
Investing into qualified projects in Puerto Rico, which is part of the U.S. and is therefore protected by the same property rights and other legal regulations as are applicable in the mainland, is now a highly strategic investment for minimizing capital gains tax for investors who plan to keep their reinvested capital within the territory.
As a U.S. territory, Puerto Rico enjoys legal and economic benefits that are not available to the neighboring Caribbean islands.
Unlike other Opportunity Zones in the continental U.S., Puerto Rico offers unique opportunities for investors.
If you’d like to learn more about the Fusion Farms Opportunity Zone Investment, please contact CEO@FusionFarmsPR.com.
Or, for more information, email your request to Info@FusionFarmsPR.com