“We’re presiding over a historic moment in our nation’s history, one of job creation, high employment, growth and opportunity,” Dr. Ben. Carson, Secretary of Housing and Urban Development, told attendees of the SALT 2019 Conference in Las Vegas Thursday morning.
Carson was there to pitch opportunity zones to investors, created as part of the Tax Cuts and Jobs Act of 2017, to incentivize business and development in economically challenged areas.
“By reinvesting unrealized capital gains, participants can defer and reduce taxes their taxes quite dramatically, sometimes down to zero, while having a transformative effect on these neighborhoods,” the secretary said.
While noting critics say it’s just a mechanism for the rich to get richer, and does little for poor people, Carson appeared to go off script, wondering “why we’re having this discussion in this country, of all countries?
“They say, ‘We need to redistribute income.’ Ever heard that crap?” he said to laughter, before adding, “This should be the last country that we have class warfare,” to applause from the audience.
“Great Britain used to say, ‘You have all these rich people like the Rockefellers and the Vanderbilt’s, but you do nothing for the poor.’ However, unlike Europe’s land barons, they invested in railroads and seaports and infrastructure that helped build a thriving middle class.”
It therefore then “truly became a land of opportunity, which is more than a slogan, hence opportunity zones and funds.”
Tax benefits
According to the IRS, in order to qualify for the tax deferral:
- Capital gains must be invested in a qualified opportunity fund (QOF) within 180 days.
- Taxpayer elects deferral on Form 8949 and files with its tax return.
- Investment in the QOF must be an equity interest, not a debt interest.
If a taxpayer holds its QOF investment at least five years, the taxpayer may exclude 10 percent of the original deferred gain.
If a taxpayer holds its QOF investment for at least seven years, the taxpayer may exclude an additional five percent of the original deferred gain for a total exclusion of 15 percent of the original deferred gain.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
