Opportunity Zone Tax Breaks

Tuesday January 29, 2019 comments

Opportunity Zone Tax Breaks

What is an Opportunity Zone: 

An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation of authority to the Internal Revenue Service.

Tax benefits of Opportunity Zones, as follows:

  • Qualified Opportunity Fund is an investment vehicle that is set up as either a partnership or corporation for investing in eligible property that is located in a Qualified Opportunity Zone. 
  • Opportunity Zones are designed to spur economic development by providing tax benefits to investors.
  • Investors can defer tax on any prior gains invested in a Qualified Opportunity Fund (QOF) until the earlier of the date on which the investment in a QOF is sold or exchanged, or December 31, 2026.
  • If the QOF investment is held for longer than 5 years, there is a 10% exclusion of the deferred gain.  
  • If held for more than 7 years, the 10% becomes 15%.
  • If the investor holds the investment in the Opportunity Fund for at least ten years, the investor is eligible for an increase in basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged.


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