For a minimum investment of $10,000, investors can defer capital gains tax until 2026 if they invest those gains in construction projects in designated opportunity zones located in metropolitan Los Angeles, Seattle, Washington, D.C., Atlanta and the San Francisco/Oakland area.
In addition to paying $0 in capital gains on investment in its' opportunity fund, Fundrise informs potential investors that they can reduce the tax they owe by up to 15 percent after seven years.
Despite the allure of zero tax on profits earned through investment in opportunity zone projects, investors should be aware that there is also a certain amount of risk associated with the federal government's Opportunity Zone Program due to a lack of specifics in the legislative language that created it, according to a Fundrise disclaimer posted online.
"As of July 2, 2018, there is uncertainty regarding the Opportunity Zone program, as the U.S. Department of the Treasury has not released guidance on many of the questions left open by the Tax Cuts and Jobs Act of 2017," Fundrise informs potential investors. "These open questions include, but are not limited to: (a) what kinds of gains, other than capital gains, if any, can be properly rolled into an Opportunity Fund, (b) how much time an opportunity fund will have to deploy the capital it has raised, (c) tax treatment of gains in an opportunity fund pass-through partnership, etc. Given such uncertainty, each prospective investor should consult with their personal tax advisors before making any investment into an opportunity fund, including the Fundrise Opportunity Fund."