The Tax Cuts and Jobs Act introduced the Opportunity Zone program to incentive investors to put their dollars to work revitalizing low-income neighborhoods. In return, investors may qualify to defer or even eliminate capital gains tax from the sale of appreciated real estate assets when they roll over those gains into Qualified Opportunity Funds (QOFs) that invest at least 90 percent of their assets in businesses and real estate located in any of the nearly 9,000 newly designated Opportunity Zones (OZ) throughout the country.
The longer taxpayers hold onto their OZ investment, the greater the tax benefit. More specifically, when investors roll over capital gains into a QOF within 180 days of the date of an asset sale, they may defer paying tax on that original gain until Dec. 23, 2026, and potentially exclude from taxation up to 15 percent of the rolled-over gain when they hold the QOF investments for at least seven years. As an added bonus, taxpayers who hold onto their QOF investments for at least 10 years may avoid capital gains tax on the investment appreciation by electing to increase the basis of the QOF investment to the fair market value of the investment on the date they sell their interest in the QOF. However, like much of the new tax law, Opportunity Zones are a complex provision that requires guidance from experienced tax and real estate professionals.
With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email firstname.lastname@example.org.