Opportunity Zone Fund or 1031 Exchange?
You have a capital gain on an investment and now you need to make a decision about whether or not to defer your capital gains.
You can do a 1031 exchange and you can opt for an opportunity zone fund.
Some commercial real estate search engines, will clearly show the "opportunity zone" (OZ) investment properties.
You can't just pick up a OZ property and receive benefits. You need to invest in a OZ fund or create your own.
The taxes rules on this are extensive, so you need to love your CPA, but tax deferments might be worth it. The deferements are good until 2026. You may have holdings past 2026 and see tax benefits.
Your tax basis on an OZ fund starts at zero and if it's held for 5 years, the tax basis goes up 10% and if it's 7 years the basis goes up another 5%. If the investment is held for 10 years, the tax basis can be reset to fair market value of the qualified opportunity fund. If this happens there isn't a tax on the gain.
Talk to your CPA if your interested in these investments.
