Cashing Out Tax Free?
Updated: Apr 5, 2019
Investors cringe when they hear about cashing out "tax-free." Taxes are merely deferred, only when a step-up in basis occurs are there no tax implications. (Verify with your tax professional).
Something has changed: Opportunity Zones
Q. How do Opportunity Zones spur economic development?
A. Opportunity Zones are designed to spur economic development by providing tax benefits to investors. First, investors can defer tax on any prior gains invested in a Qualified Opportunity Fund (QOF) until the earlier of the date on which the investment in a QOF is sold or exchanged, or December 31, 2026. If the QOF investment is held for longer than 5 years, there is a 10% exclusion of the deferred gain. If held for more than 7 years, the 10% becomes 15%. Second, if the investor holds the investment in the Opportunity Fund for at least ten years, the investor is eligible for an increase in basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged.
Consider looking in an opportunity zone. You don't have to cash out if you don't want to. The point is to have more than one or two exit options.
Feel free to call me directly to discuss.
707.326.1117 - DRE#01924065
(Simon Raya & RE/MAX Commercial are not tax advisors - Verify all tax information with you qualified tax professional).