For Investors with Potential Capital Gains
If you are an individual, partnership, LLC or corporation with a capital gain realized within the past 180 days, you can invest your gain in a Qualified Opportunity Zone Fund (QOZ Fund) and:
1. Defer recognition of that gain until the earlier of December 31, 2026 or your sale of your QOZ Fund investment;
2. Reduce the recognition of any gain of up to 15% by retaining your QOZ Fund investment for at least seven years; and
3. Eliminate all future gain from the disposition of your QOZ Fund investment if you have held that investment for at least ten years.
For New or Existing Businesses
If you are looking to start or expand your business, you can locate the new or expanded business in an Opportunity Zone (OZ) and obtain the benefits described above.
For Developers
If you are a developer, then QOZ Funds provide a vehicle for the funding of projects that may have not otherwise been feasible.
For Owners of Properties Located in Opportunity Zones
If you already own a property in an OZ, you may still benefit from this new law, albeit not directly. There are at least three ways of doing so:
1. Sell your property to a QOZ Fund. If your existing property is in a good location with development potential, it can command a premium price:
(a) You can sell on an installment plan and recognize gain over several years;
(b) You can participate in a section 1031 exchange to defer recognition of gain; or
(c) You can invest your gain in QOZ Funds [with some possible limitations];
2. Co-venture with a QOZ Fund; or
3. Ground lease your property to a QOZ Fund