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What happens with my capital gains if I invest in an Opportunity Zone in a state that hasn’t conformed to the federal rules?

How should investors evaluate the program from both a federal and state perspective?


Answers
  • Paul Wassgren
    April 16, 2019

    Many states have not yet conformed. In those cases, investors will need to pay the state level tax on the prior gain, but can still benefit from the federal tax program.

  • Phil Jelsma
    March 22, 2019

    In states like California, you will have to pay the tax when you sell a capital asset in 2019 and when you sell your interest in the Opportunity Zone fund in 10 years or more.

  • Ed Mofrad
    March 22, 2019

    Opportunity Zone rules apply to all 50 states and U.S. territories. Therefore, regardless of the state, you are covered for the treatment of your capital gains on the federal level. Each state may have a variation of conformity. To help you more, we need to know which state you are referring do, and look up the particular situation of that state.

  • Valerie Grunduski
    April 03, 2019

    If an investor resides in a non-conforming state, she may not be able to defer the initial capital gain investment or benefit from the 10-plus-year hold exclusion. Some non-conforming states are looking to create additional incentives to encourage Opportunity Zone investment.

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