Opportunity Zone Tax Benefits

Almost the entire Greeley Downtown Development Authority boundary is designated as an Opportunity Zone. The Opportunity Zone program is a federal incentive that encourages long-term private investments by giving investors tax benefits for investing in real estate projects and operating businesses. Investors receive tax incentives in the form of deferral and elimination of state and federal capital gains taxes.

How Opportunity Zones Work:

Investors receive tax benefits when they reinvest capital gains, or profits from the sale of an asset, into opportunity zones. Investors may benefit in three ways.

• They can defer paying taxes on the original capital gain until they dispose of the investment or until 2026, whichever comes first.
• If they hold the investment for at least ten years, they will not have to pay any capital gains tax on their opportunity zone investment.

For example, assume an investor sells their company stock for $1 million and has $100,000 in capital gains from that sale. The investor puts the $100,000 into an opportunity zone fund that invests in a new business in an opportunity zone.

The investor can defer paying capital gains tax until they have disposed of the opportunity zone investment or December 31, 2026, whichever comes first.

If they continue to hold the opportunity zone investment for at least 10 years, they will not have to pay any capital gains tax on that investment. If their $100,000 opportunity zone investment appreciates 100% over 10 years, they owe $0 in capital gains tax instead of $20,000. Investors can dispose of their OZ investment as late as 2046 and still get the benefit of eliminating taxes owed on the appreciation of the OZ investment.

For more information, check out Colorado Office of Economic Development & International Trade