Qualified Opportunity Zones
What are Qualified Opportunity Zones?
Defined under the 2017 Tax Cuts and Jobs Act, qualified opportunity zones (QOZs) are census tracts (permanent statistical subdivisions of a county) composed of economically disadvantaged communities, including a small percentage of tracts contiguous to low-income census tracts. With more than 8,700 QOZs identified across the United States, this source of untapped capital to revitalize underserved communities has attracted significant attention.
Qualified Opportunity Funds Invest in Qualified Opportunity Zones
A qualified opportunity fund (QOF) is an investment vehicle typically organized as a corporation or a partnership which must hold at least 90 percent of its assets in QOZ businesses and assets. From the date of sale of an appreciated asset that triggers taxable gains, an investor has 180 days to invest up to the amount of those gains in a QOF in order to reap the potential tax advantages of the Opportunity Zone Program.
Investors with taxable gains from the sale or exchange of virtually any type of property, including the following, may potentially defer gains by reinvesting the proceeds in a QOF within 180 days of the sale or exchange.
• Mutual Funds
• Real Estate
Potential Tax Benefits of Qualified Opportunity Funds
An individual who invests in a QOZ is eligible for favorable tax treatment in the form of both deferral and forgiveness. The potential tax benefits are summarized below.
• QOF interest must be acquired on or
• Must hold QOF investment for 5 years
• Receive 10% step-up in basis on the gain
REDUCE TAX LIABILITY
• Pay tax on gain which includes the 10%
step-up in basis, thus reducing tax amount
that has been deferred to 12/31/2026
• Hold QOF for 10 years or more will allow
for tax elimination
Please consult your tax advisor and/or your attorney before considering investing in any QOZ/QOF or other tax related investment. Willow Cove Investment Group, Inc. does not review or comment or approve the use of any investment for tax purposes. Tax related investments must be made with consultation with a tax specialist or attorney outside of Willow Cove Investment Group, Inc. or any of its Registered Representatives