Opportunity Zones

Opportunity Zones offer a tax incentive to stimulate investment in economically distressed communities. In Texas, 628 census tracts were designated as Opportunity Zones by Governor Abbott on March 21, 2018, including areas in downtown Amarillo and the Barrio Neighborhood Plan.

How to Benefit:

1. Sell: Realize capital gains from the sale of a building or asset. For instance, selling an asset for $2 million with an initial investment of $1 million results in a $1 million profit.

2. Deposit: Invest the capital gain into a Qualified Opportunity Fund. This investment defers the capital gains tax. For example, investing $1 million defers $150,000 in taxes.

3. Hold Assets: Keep the investment in the fund for 5 to 7 years. Holding for 5 years reduces the tax basis by 10%, while 7 years reduces it by 15%. This reduces the capital gains tax accordingly.

4. Sell After 10 Years: If you sell the asset after 10 years, you pay no capital gains tax on the appreciation.

Tax Savings: Over 10 years, you could save up to $172,500 in taxes.

Additional Resources:

• IRS Frequently Asked Questions
• U.S. Department of Treasury Regulations
• Economic Innovation Group

Note: The City of Amarillo does not administer Opportunity Zone tax provisions. The information provided is for educational purposes and does not endorse specific funds.