The government tax revenue authorities demand a piece of your income; and they expect their tax cut when you realize a profit. This cut is known as a Capital Gains tax on your investments.
For tax purposes, you must understand the difference between an unrealized gain and a realized gain. A realized gain becomes realized when you sell the asset or investment at a profit. For example, you realize a gain on the sale of a home if you purchase it for $1M and sell it for $1.5M and your gain is $500,000. The tax on the capital gains only happens when the asset or investment is sold or realized.
For tax purposes, an unrealized gain is a potential profit that exists on paper only. An unrealized gain is a potential profit that exists on paper – an increase in the value of asset or investment you own but have not sold or realized a profit yet. For example, you purchase bitcoin and a year later the bitcoin is worth 20% more than you paid for it. Although your investment has increased in value by 20%, your gain is unrealized since you still own it.
Investors can also have realized and unrealized losses. An unrealized loss is a decrease in the value of an asset or investment you own but have not sold yet – a potential loss that happens when you sell an asset or investment. Whereas a realized loss happens when you sell an asset or investment for less than you paid for it at a loss.
The tax system in the United States benefits long-term investors. Short-term investments are almost always taxed at a higher rate than long term investments. Asset and investments you hold for more than one year qualify for the more favorable long-term capital gains rates.
One of the most amazing long term investment opportunities are Opportunity Zones. We know one such Fund helps build affordable housing for the homeless, bunkers for preppers, a business office or home that can be placed on any property and the investment can be 100% tax exempt if you hold the investment long term for 10 years.
We learned about this tax exempt opportunity from the leading tax expert on Opportunity Zones, Blake Christian.
This is what the wealthy with 100K are doing to shelter their hard-earned investment gains. The US government has created tax legislation around Opportunity Zone Funds that make it a valuable investment.
Go To This Link To Learn More: https://www.mitmodular.com/opportunity-zones
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