Wiser Wealth: With Tax Season on the Doorstep, Now is the Time to Consider Qualified Opportunity Funds


United States Capital on the $100 Bill

Financial fluctuations of late have created some major problems in some areas, and major opportunities in others. For people looking to reap a profit from stocks and properties, the year has proven fortuitous. But that inevitably leads to concern about how much could be lost to capital gains taxes.

In an article for Islander News, Tiffany Lam-Balfour writes that such concerns are more reason than ever to explore qualified opportunity funds, as they have perks that can help protect your earnings from taxes. And if you invest before the end of the year, there are actually three benefits you could receive.

For those who don’t know, the reason this perk exists is that the government wants to encourage the financial growth of areas of the country that are struggling. By investing in a qualified opportunity fund, you are hopefully helping to boost an area in need of things like jobs or housing. And to incentivize you to do this, the government provides benefits to you the investor.

If you invest before the end of 2021, you will receive several perks. For one, you will have the option to defer owing the taxes on your original capital gain until you have to file your 2026 taxes.

Second, if you keep your money invested in the funds for five years, it provides you with a 10% reduction in the capital gains amount you owe after you have withdrawn from the investment.

Lastly, if you decide to stay invested for at least ten years, if your investment has appreciated in value during that time, you will receive that extra amount free of taxes.

Fred Hubler, Chief Wealth Strategist for Creative Capital Wealth Management Group has been busy using opportunity zone funds to help reduce his client’s stock exposure.

“We’ve been concerned about a market current for some time now and until the opportunity zone funds were available, selling stocks would generate significant capital gains. Now we can reduce our stock exposure, take the gains and move them into the fund and get diversification while deferring (and reducing) the capital gains,” says Hubler.

He also likes that the underlying investment in the opportunity fund is real estate, an asset not tied to the stock market.

As you can see, qualified opportunity funds do not work quickly, but they reward you for patience. Having something you don’t have to touch for years only to eventually come back to it with bigger gains is not a bad deal.

But if you are looking to make the most out of this arrangement, it would be wisest to do before the new calendar year, so 2021 counts as one of your years despite there only being three months left.

To learn more about why you should consider opportunity zone funds, reader the Islander News post here.


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Want to know if you’re on the right path financially? Fred Hubler’s Second Opinion Service (SOS) is a no-obligation review with Creative Capital Wealth Management Group‘s Chief Wealth Strategist.

It’s simply not possible to get a reliable second opinion from the same person who gave you the first one. Click here to schedule an SOS meeting with Fred and his team.






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