Urban Catalyst’s Guide to Short-Term Capital Gains Tax
by Erik Hayden, on Dec 3, 2020 10:56:57 AM
Many investors have been asking us lately if they can invest their short-term capital gains into a Qualified Opportunity Zone Fund.
The short answer? Yes. With short-term capital gains, you could pay up to 37% income tax* depending on your federal income tax bracket.
*According to Forbes Advisor, “In the U.S., short-term capital gains are taxed as ordinary income. That means you could pay up to 37% income tax, depending on your federal income tax bracket.”
Have you experienced short-term gains? We’ve got you covered!
To help answer some questions you may have, below are resources you can leverage to calculate how much you might end up paying in taxes, and how to invest your short-term capital gains into an Opportunity Zone Fund like Urban Catalyst to potentially avoid paying taxes.
Let’s look at what financial advisors are saying.
- NerdWallet: 2020-2021 Capital Gains Tax Rates — and How to Calculate Your Bill
- Bloomberg Tax: Three Years of Opportunity Zones and Outlook for 2021
“The taxpayer can make a $1 million investment in an opportunity fund on Dec. 1, 2020 and elect to defer $1 million of 2019 long-term capital gains to potentially 2026. The $1 million of long-term capital losses offset the remaining $1 million of short-term capital gains to result in zero 2019 tax. The taxpayer effectively converts 2019 short-term capital gains into 2026 long-term capital gains.”
- The Motley Fool: 16 Smart Tax Moves for 2021
“Among other tax breaks, these special zones allow for a multi-year deferral of capital gains taxes. Specifically, capital gains aren't taxed until the end of 2026, so if you're willing to dabble in real estate investing, opportunity zones could be a good choice.”
Ready to invest in Silicon Valley’s leading Opportunity Zone Fund? Contact us today.
Our fundraising ends on December 30.
The statements, views, and opinions expressed herein are those of the individuals making the statements and do not necessarily reflect the official policy or position of Urban Catalyst Manager LLC or any investment sponsored by Urban Catalyst LLC and are provided for informational purposes only and are not intended to be, nor should be construed or used as financial, legal, tax or investment advice, nor should this information be used or considered as an offer to sell or a solicitation of any offer to buy any interest in Urban Catalyst Opportunity Fund I LLC (the “Fund”), an investment sponsored by Urban Catalyst LLC (the “Sponsor”).
THIS MATERIAL IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY SECURITIES. THE OFFERING AND SALE OF INTERESTS IN URBAN CATALYST OPPORTUNITY FUND I LLC (“URBAN”) IS BEING MADE ONLY BY DELIVERY OF URBAN’S PRIVATE PLACEMENT MEMORANDUM (“PPM”), CERTAIN ORGANIZATIONAL DOCUMENTS, SUBSCRIPTION AGREEMENT AND CERTAIN OTHER INFORMATION TO BE MADE AVAILABLE TO INVESTORS (“OPERATIVE DOCUMENTS”) BY URBAN’S SPONSOR. ONLY ACCREDITED INVESTORS CAN INVEST. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. INVESTMENTS IN SECURITIES ARE SPECULATIVE, INVOLVE A HIGH DEGREE OF RISK, AND ARE NOT SUITABLE FOR ALL INVESTORS. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX AND LEGAL PROFESSIONALS PRIOR TO MAKING INVESTMENT DECISIONS.