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Opportunity Zones were created during the tax overhaul bill in late 2017 and aim to revitalize economically distressed community by incentivizing private investments. Opportunity Zones are created through the designation of Census tracts by governors of states. Hidalgo County was designated 23 Opportunity Zones: Third most in Texas.
How do Opportunity Zones work?
Investors can defer taxes on any prior capital gains by investing into a Qualified Opportunity Fund (QOF).
If the QOF investment is held for:
Longer than 5 years, there is a 10% exclusion of the deferred gain.
Longer than 7 years, there is a 15% exclusion of the differed gain.
Longer than 10 years, investors pay no capital gains taxes produced through their investment in the QOF.
Investors do not need to live in an Opportunity Zone. Only the investment needs to be in a QOF.
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