BY: OMAR IZFAR, ATTORNEY, WILSON CRIBBS+GOREN
The Tax Cuts and Jobs Act of 2017 establishes a federal tax incentive for deferring andpartially exempting capital gains for investments made into a “Qualified Opportunity Fund” which may own business property within “Qualified Opportunity Zones.” In March, Governor Abbott designated 150 Opportunity Zones in the metro Houston area and 628 state-wide.
While the designated Opportunity Zones are supposed to be low-income communities as defined in the Internal Revenue Code, the designated areas include some prime areas for real estate investment, such as downtown Houston, parts of midtown, and much of east downtown, and many other potentially great places to park capital gains from a real estate sale. There are real tax incentives that give you 1) a deferred tax on your capital gains from the sale of real estate; 2) receive a stepped-up basis on those gains after some time, and 3) allow you to eventually take your appreciation tax-free from the sale of property held by your Qualified Opportunity Fund.
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