About 95% of Puerto Rico has been labeled as a Qualifying Opportunity Zone (QOZ) under the program. Secretary Mnuchin estimates over 100 billion of assets will flow into QOZ projects during the life of the program.
Provided you invest the full amount of assets subject to capital gains, you are able to defer taxes for 7 years, and at year 5 and 7 the original basis for that tax amount is moved up 5% and then an additional 10%. That is a step up of 15% on your basis on top of the deferral. If the investment into this QOZ project is held for 10 years, then there won’t be capital gains on the new investment.
Why QOZ in Puerto Rico?
- It’s exactly this type of program which runs counter to a culture of economic extraction and disaster capitalism. The very tax advantage nature of the projects implies you are in it for the long haul. The projects requires investment into the local economy and at least a 5-10 yr permanence in order to gain the tax benefits. It’s almost as if QOZ was perfectly built to meet concerns of an Island that is weary of carpet-bagger mentalities.
- Opportunities born out of identifying key pain points on the Island. While real-estate is a clear first low hanging fruit for QOZ capital, other business opportunities also qualify if they are businesses that operate within the designated QOZ tracts of land.
Puerto Rico is open for business, and a year and a half after Hurricane Maria hit the Island, it’s well on its way to recovery.
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