Qualified Opportunity Zones (QOZ) | 1031 Investment Real Estate

Qualified Opportunity Zone Funds

What is a Qualified Opportunity Zone Fund?

A Qualified Opportunity Zone Fund (QOZF) Is a partnership or corporation that holds at least 90% of its assets in QOZ property and can make investments in a wide variety of real estate. It’s an investment vehicle created to invest in Qualified Opportunity Zones (QOZs) which are designated economically distressed areas under a federal incentive program created by the Tax Cuts and Jobs Act of 2017 and made permanent with the passage of the OBBBA of 2025. Opportunity Zone legislation is likely the most impactful provision in the entire Internal Revenue Code providing for deferral and exclusion of any capital gain from the sale of any asset.

Key features of Qualified Opportunity Zone Fund Investment 1.0:

Eligible Investment: Only the realized capital gain from the sale of an asset is eligible. This includes gains from the sale of real estate, businesses, partnerships, executive equity grants, public or private stocks, bonds, cryptocurrency, art, collectibles, etc.

Current Tax Incentives QOZF 1.0:

Tax Deferral. Taxes on the invested gain are deferred until December 2026, paid in 2027.
Step-Up in Basis. Investors who hold their Qualified Opportunity Zone Fund (QOZF) investment for the full 10-year period will qualify for an elimination of the capital gains realized from the sale of the fund’s assets.
Tax Efficient Income. QOZFs may provide the opportunity to generate tax-efficient income, due to depreciation deductions, without any depreciation recapture (unrecaptured 1250 gain) tax liability if the QOZF investment is held for at least 10 years.
Fair Market Value Valuation Opportunity. Section 1400Z-2(b) Tax deferral of gain invested in Opportunity Zone Property may provide for the lesser of the amount invested or the fair market value of the investment as of December 31, 2026 for tax purposes.

Investment Timeline: Investors have 180 days from the date of their asset sale to reinvest in a QOZF.

Qualified Opportunity Zones Funds 2.0 / OBBBA 2025: Details Coming Soon.

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Understanding Qualified Opportunity Zone Funds

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