A Qualified Opportunity Fund is an investment vehicle that is set up as either a partnership or corporation for investing in eligible property that is located in a Qualified Opportunity Zone.
Below are frequently asked questions about Qualified Opportunity Funds:
Q. What is a Qualified Opportunity Zone?
A. The QOZ regime contained in the Tax Cuts and Jobs Act (“TCJA”) allows taxpayers to defer tax on capital gains from the sale of investments if the capital gain is invested within 180 days in a qualified opportunity fund (“QOF”). The deferral of the capital gains invested may last until December 31, 2026 and may also allow the taxpayer to exclude up to 15% of the deferred gain completely.
More importantly, the TCJA allows for a permanent exclusion (through a basis step-up) of capital gains derived from the later sale of the investment in a QOF provided that is held for at least ten years. Proposed regulations permit an investor to hold its investment in a QOF until December 31, 2047 and still receive the benefit of capital gain exclusion.