Opportunity
Zones

Opportunity
Zones

What are
Opportunity
Zones?
Opportunity Zones (OZs) are part of a developmental program through the 2017 Tax Act that promotes the long-term investment in and development of low-income urban and rural real estate across the United States.

Each OZ is a selected geographic area which exceeds certain rates of poverty and therefore has a need, and significant potential, for revitalization. Current OZs can be found in every state.
What are
Opportunity
Funds?
An Opportunity Fund is an investment vehicle for those that would like to invest in OZs, and receive the tax benefits that come along with such an investment.

For a partnership, corporation, or LLC to qualify as an Opportunity Fund (QOF), they must hold 90% of their total assets within OZs.  Each QOF must comply with this and other statutory requirements in order to use the tax benefits.
How to Invest
in an OZ?
OZ INVESTING REQUIREMENTS:
1
The investment must be a reinvestment
of realized capital gains
2
To be eligible for tax benefits, the investor must invest those capital gains through a QOF.
3
The investment must take place within 180
days of the realized date of those capital gains.
After these requirements are met, tax breaks are earned at three distinct milestones. Investors hit those milestones based on how many years they’ve held their investment in a QOF.
Benefits of
investing in an OZ?
5 YEARS
After holding the investment for at least 5 years, the investor receives an increase in basis of 10% of their original deferred gain.
7 YEARS
After holding the investment for at least 7 years, the investor receives an increase in basis of 5% of their original deferred gain.
10 YEARS
After holding the investment for 10 years, the investor receives a permanent exclusion from taxable capital gains on their QOF investment.
Difference between
QOF
investment &
1031 Exchange.
COMPARISON OF OPPORTUNITY ZONES
AND SECTION 1031
Opportunity Zones
Section 1031
Opportunity Zones
Section 1031
Eligible Investment Assets
All property (real or personal) located in an Opportunity Zone
Real Property held for investment or business purpose
Eligible Gains for Deferral
Any taxable capital gain, but not ordinary gains
All gains from real property
Eligible Amount for Deferral
Capital gains, in any amount
All proceeds
Qualified Intermediary/QOF
No intermediary is required, but QOF annual reporting is required
A Qualified intermediary is required
Investment Deadlines
180 days to invest in a QOF
45 days to identify 180 days to close
Minimum Holding Periods
5,7, and 10 years for tax benefits to begin
No time restrictions
Timing of Recognition of Taxable Gains
December 31, 2026 on original gain, unless sold earlier
Upon sale, unless another exchange is completed
Note: Based on the second set of Treasury Regulations it appears that in most cases a taxpayer can enter into a 1031 exchange and then, if it fails, invest in an Opportunity Zone
Calculate your potential
after-tax returns
Current Value
Exit Value
Learn more about
Opportunity
Zones...
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