Qualified Opportunity Zones
Tax Deferral Benefits
Incentives for investors to invest capital gain dollars into Qualified Opportunity Zones in order to benefit these economically distressed areas throughout the country.
Tax Deferrals and Gain Elimination –
- The invested capital gain is deferred until the sooner of 2026 or the sale of the investment in the Qualified Opportunity Zone Fund (QOF defined below)
- If the QOF is held for 5 years = 10% elimination of the original capital gain
- If the QOF is held for 7 years = 15% elimination (total) of the original capital gain
- If the QOF is held for 10 years = Tax free appreciation on the invested capital gain
- Ohio is proposing a 10% tax credit on OH QOF investments in excess of $250k
Qualified Opportunity Zone Fund (QOF) –
- Vehicle used to invest in a Qualified Opportunity Zone
- Can be a partnership or C Corporation, including LLCs taxed as either type
- Capital gains must be invested within 180-days from the capital gain event
Qualified Opportunity Zone Business Property (QOZ Business Property) –
- Three potential investments – QOZ Partnership or Corporation or the QOF’s purchase of QOZ Business Property
Barnes Dennig can advise investors and developers with tax compliance and interpreting the new tax law to maximize gain deferral and private equity investment in OZ’s.
- Timelines to meet critical required deadlines.
- Advisory on tax regulations for Opportunity Zone investments.
- Guidance on Qualifying OZ Property.
- Guidance on language for partnership agreements, etc.
- Tax return elections.