Opportunity Zones are specific census tracts (roughly 20% of each state) nominated by the Governor of each state that qualify for investment in business or property through Opportunity Funds.
There are more than 8700 Qualified Opportunity Zones in the United States. In addition, nearly all of Puerto Rico is an Opportunity Zone. Browse our map below to see designated Opportunity Zones across the country.
Qualified Opportunity Funds are unique investment vehicles that enable investors to take advantage of new tax incentives incorporated invest in businesses and property located in Opportunity Zones.
Opportunity Fund Requirements
Specific tax incentives are offered to tax payers that invest their capital gains into Qualified Opportunity Funds based on the length of time their investment is held. These tax incentives include:
Many investors have inquired about the primary differences between a 1031 exchange and an Opportunity Zone investment. We’ve added a table below comparing various aspects:
Comparison of Tax Deferred Real Estate Investment Structures
|Comparison||1031 Exchange||Opportunity Zone|
|Use of Property||Must be like-kind||Does not need to be like-kind|
|Nature of Property||Must be real estate||Can be real estate, business property or operating business.|
|Identification of Reinvestment||45 days||180 days|
|Closing on Reinvestment||180 days||180 days|
|Proceeds to invest||Entire proceeds from sale||Only the gain on the sale|
|Partnership Interests||Not allowed||Allowed|
|Stock in Corporations||Not allowed||Allowed|
|Recognition of Deferred Gain||Upon sale of replacement property unless further deferred to new like-kind property||“Recognition Date”- earlier of sale of investment in QO Fund, or December 31, 2026|
|Tax Basis Step-Up||None||10% if 5-year hold. 15% if 7-year hold.|