View of island buildings in front of the ocean.
Alexandra Sabalier
June 24, 2022
1 min

Tax Benefits of Investing in an Opportunity Zone

The Opportunity Zones Program was created to attract investments and generate economic development in low-income communities, known as Qualified Opportunity Zones. Here you can learn more about what an Opportunity Zone is, how to get the most out of your capital profits, and what type of investment activities are eligible.

I. What is an Opportunity Zone?

An Opportunity Zone is an economically-deprived community where new investments may be eligible for a preferential tax treatment. The communities are certified as Opportunity Zones by the United States Treasury Secretary through the IRS. Puerto Rico is an attractive place for investments because 98% of the island was designated as an Opportunity Zone (Act 21-2019, known as "2019 Puerto Rico's Opportunity Zones and Economic Development Act").

II. How does an investor benefit from investing in Opportunity Zones?

The eligible taxpayer can go without paying taxes on their profit if the taxpayer has an eligible profit and invests it in a Qualified Opportunity Fund. A Qualified Opportunity Fund (QOF) is an investment vehicle that was created to invest in Qualified Opportunity Zones. In just 10 years, the taxpayer can be fully exempt from taxation on their investments in a QOF. Note that the deferred earnings should be recognized before December 31, 2026.

Here is a brief overview of the deferral and exclusion of capital profits:

5 years: If the investment in a QOF is maintained for 5 years, the investor will tribute for the 90% of capital earnings invested in the QOF.

7 years: If the investment in a QOF is maintained for 7 years, the investor will tribute for the 85% of the capital earnings invested in the QOF.

10 years: If the investment in a QOF is maintained for 10 years, the earnings generated will be totally exempted from taxation.

III. What is considered an eligible activity?

An eligible activity is a Priority Project in Opportunity Zones.

  • Priority Projects such as development activities for sale or rent - Examples: affordable housing, residential or commercial property, industrial use property, substantial improvement of existing projects for commercial use
  • Eligible business activity done completely in an Eligible Zone and carried through the QOF
  • Other economic activities that request to be approved as a Priority Project by writing a letter of application to the Priority Projects in Opportunity Zones Committee

Book your tax consultation with me to learn more about how you can be exempt from taxes on your capital profits

Why hire me?
  • 100% Online and Safe
  • Personal Lawyer
  • Affordable
  • At Sabalier Law, you count with expert legal representation and guidance throughout your entire process as well as support afterwards
  • 100% online services using the latest in secure technology to effectively and successfully represent you and your case no matter where you reside in the world
  • Confidential communication, document review, and legal advise fully protected by the Attorney- Client privilege
  • Unlimited legal consultations via telephone, video-call, and e-mail
  • Fully Billingual communication, and legal services in English and Spanish
  • Expert legal preparation and expedited submission of your documents
  • Constant updates and communication with you on the status of your case, applications, and documents' reviews
  • Timely notification of changes in the laws and procedures that are relevant for your case
  • Attentive personal support throughout our entire Attorney- Client relationship
  • Guaranteed maximum secure electronic payment platforms to ensure smooth and easy payment methods anywhere you are located in the world
© Copyright Sabalier Law 2024
Made with special  by
Javier Ortiz Saorin