Perhaps you own Amazon stock that has skyrocketed in value. Or you have investment real estate that you think has peaked. Now, there is a way for you to sell and defer the taxes on your capital gains: invest those gains in an Opportunity Zone, such as Seattle’s Pioneer Square or the Arts District in LA or even sections of Queens where Amazon’s new HQ2 will go. There are some 8,700 Opportunity Zones across the US and most of them are in dense urban areas with a shortage of housing. (Seattle-area Opportunity Zones are shown in blue on the map.) Reinvesting capital gains in Opportunity Zones can be a win-win: you get to defer, lower and even eliminate some capital gains while investing in up-and-coming areas that could thrive in the next decade. But there are also a lot of pitfalls and unknowns.
LNWM’s Investment Strategy & Research Group has already started our search for promising funds investing in Opportunity Zones. In the meantime, my colleague Kristi Mathisen and I explained the basics of how investing in Opportunity Zones works in a paper for Navigator, LNWM’s quarterly. We present the tax benefits, the time restrictions, and what to consider when investing. You might also want to view this webinar I recorded last week on Opportunity Zones: