Opportunity Zones

What is a Qualified Opportunity Zone?

A Qualified Opportunity Zone (QOZ) is an economically-distressed community that has been designated as such by the State.

You can search for Opportunity Zones here.

How do I invest in an Opportunity Zone?

You must invest the capital gains from the sale of real estate, stock, or a business into a QOZ within 180 days.

To invest in a QOZ, the LLC that buys the property located in a QOZ self-certifies by filing Form 8996, Qualified Opportunity Fund, with its federal income tax return.

What are the tax benefits?

Taxes on the capital gains invested in a QOZ are deferred until December 31, 2026.

Investors tax basis will be increased 10% if the QOZ investment is held 5 years. If the investment is held for at least 7 years, the tax basis will be increased to 15%.

If an investment in a QOZ is held for 10 years, all of the profit from the sale of that property is tax-free.

Example:

For example, you make $200,000 in profit from the sale of a stock or business. You take that capital gain and buy a property located in a QOZ within 180 days. You hold that property for at least 7 years. This decreases your $200,000 gain by 15%. So, now you only pay taxes on $170,000.

After holding the investment property for 10 years, you sell the property and make an additional $400,000 profit. This additional profit is entirely tax-free.

Why This is Considered a 1031 Exchange on Steroids

Opportunity Zone investments offer even more powerful tax benefits than traditional 1031 exchanges:

• No like-kind requirement: Can invest gains from any asset type into real estate
• Basis step-up: 10% reduction at 5 years, 15% at 7 years
• Complete tax elimination: 10-year hold eliminates all taxes on new gains
• Flexibility: More investment options than traditional exchanges

The Power of Long-Term Wealth Building

Opportunity Zones create a unique opportunity for investors to:

• Defer immediate tax liability on existing gains
• Reduce tax burden on original gains through basis adjustments
• Eliminate future taxes entirely on new appreciation
• Build generational wealth through tax-free growth

This combination of benefits makes Opportunity Zone investing one of the most powerful tax-advantaged investment strategies available today.

Conclusion

Opportunity Zones represent a compelling investment strategy that combines significant tax benefits with the potential for strong returns in emerging markets. The ability to defer, reduce, and ultimately eliminate capital gains taxes makes this program particularly attractive for investors with substantial gains to reinvest.

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Interested in exploring Opportunity Zone investments? Contact our team to discuss how QOZ strategies might fit within your investment portfolio and tax planning objectives.