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Potential Tax Advantages of Opportunity Funds

There are three potential tax advantages for Opportunity Fund investors:

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DEFERRAL OF CAPITAL GAINS

Any Capital Gains can be invested into an Opportunity Fund. By investing in an Opportunity Fund, the invested Capital Gains do not need to be recognized when the investment is sold or exchanged or until December 31, 2026.

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REDUCTION OF CAPITAL GAINS

After holding an investment in the Opportunity Zone Fund for seven years the Capital Gains tax on the original Capital Gains is reduced by 10%. This is the equivalent of having a 10% step-up in basis on the initial investment.

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NO CAPITAL GAINS TAX ON FUND PROFITS

After holding an investment in the Opportunity Fund for at least ten years, an investor’s disposition of an investment in the Opportunity Fund does not result in any additional federal income taxes.

The foregoing discussion of the various aspects of the Opportunity Zone program is based upon positions that we believe to be reasonable given the statute as currently written and prior Treasury and IRS precedent; however, there can be no assurance that the forgoing discussion will ultimately prove to be certain as Treasury guidance and regulations are subject to change on the Opportunity Zone program. Given such uncertainty, each prospective investor should consult with their personal tax advisors before making any investment into an opportunity fund, including the Urban Catalyst Opportunity Fund I.


Step-By-Step Investment Process