Opportunity Fund

By investing into an Opportunity Fund, investors can not only defer and reduce their existing capital gains tax liability, but also eliminate future capital gains tax on returns earned from the Opportunity Fund.

With the tax reform enacted December 22, 2017, a new tax incentive program was created to foster investment in designated areas. In return for investing capital into these targeted areas, investors are eligible to receive deferral and reduction of current capital gains and no tax liability on future capital gains from the Opportunity Zone investment.

Any taxpayer can defer capital gains in an unlimited amount from the sale of any property to an unrelated person by investing part or all of the proceeds from such sale or exchange in an Opportunity Fund. The property sold can be stock, business assets, personal assets, or any other property. To defer a gain, a taxpayer must invest proceeds from the sale in an Opportunity Fund within 180 days, beginning on the date of the sale, in an amount equal to the gain to be deferred.

  1. A temporary deferral of inclusion in taxable income for capital gains reinvested in an Opportunity Fund. The deferred gain must be recognized on the earlier of the date on which the opportunity zone investment is disposed of or December 31, 2026.
  2. A step-up in basis for capital gains reinvested in an Opportunity Fund. The basis is increased by 10% if the investment in the Opportunity Fund is held by the taxpayer for at least 5 years and by an additional 5% if held for at least 7 years, thereby excluding up to 15% of the original gain from taxation.
  3. A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in an Opportunity Fund if the investment is held for at least 10 years. This exclusion only applies to gains accrued after an investment in an Opportunity Fund.
To receive the most favorable tax treatment on their investment, investors are incentivized to hold their Opportunity Zones over the long term. The program provides the most incentives to investors that hold their investment for over 10 years. Opportunity Fund Benefits

In 2018, an individual investor sells 1,000 shares of Amazon stock that they purchased in 2013 for $250,000. The sale at $1,250 per share results in a $1 million capital gain. Instead of paying the $238,000 in federal capital gains tax on this sale, the investor rolls their $1 million gain into a Qualified Opportunity Fund that invests in a real estate development project located in Opportunity Zones with a plan to liquidate in 2028. The assumed value of this investment in 2028 is $2 million. The benefits received by this investor include:

  • Investing $1 million instead of the $762,000 that would be remaining if the capital was not re-invested into an Opportunity Fund.
  • Paying $202,300 in taxes in 2026 instead of paying $238,000 in 2018.
  • Owing no additional tax on the $1 million in capital gains on the Opportunity Fund investment realized in 2028.
  • Bonaventure has a pipeline of multifamily and senior living opportunities in Hampton Roads, Richmond and Northern Virginia.
  • Investors with Capital Gains co-invest with Bonaventure in a planned project.

OR

  • Bonaventure Custom designs an investment to meet the investors needs.
  • Bonaventure co-invests with the investors and receives market based fees as well as profit sharing based upon exceeding return thresholds.
Opportunity Zones Map