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QUALIFIED OPPORTUNITY ZONE
POTENTIAL TAX BENEFITS
AVAILABLE TO A QOZ INVESTOR
Qualified Opportunity Zone legislation offers QOZ investors a powerful potential combination of tax incentives, including deferral of capital gains taxes, a step-up in basis and tax-free growth. Prior to December 31, 2026 (the "Investment Cutoff Date"), if an investor sells any asset (not limited to a real estate asset) that generates a capital gain and invests an amount equal to that gain (or a lesser amount} in a QOZ within 180 days thereof, the taxpayer could receive the following benefits:
DEFERRAL
of the taxes owed on the initial capital gain.
REDUCTION
of that initial capital gain by 10 percent if the QOZ investment is held for five years.
ELIMINATION
of capital gain taxes from realized appreciation in the QOZ, provided the investor's holding period is 10 years or more.
QOZ INVESTMENT TIMELINE
THREE ELEMENTS OF TAX BENEFITS:
HELD FOR 5 YEARS
2021
-Investment in QOZ
-Asset sale - generating capital gain
2022
2023
-Deferred zero basis capital gain stepped up 10%
2024
2025
-Deferred zero basis capital gain stepped up 10%
HELD FOR 10 YEARS
2026
-Capital gains taxes due on the portion of the deferred capital gain not previously stepped up
2027
2028
2029
-Basis in QOZ investment stepped up to fair market value
-Forgiveness of capital gains taxes from QOZ asset appreciation
2030
2031
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