Ask A Question

Are distributions in a OZ project tax-exempt?

During the years that capital gains are tax-deferred, are distributions from the project in the Opportunity Zone tax-exempt?

  • Brad Cohen
    October 10, 2020

    To the extent of basis, they are exempt. It is a little tricky to determine the basis.

  • Matt Campbell
    October 09, 2020

    Generally no, but distributions that do not exceed the basis the investor has may be treated as a return of capital. Since a capital gain investor has zero basis on an OZ investment, there would have to be a basis from qualifying debt to have a tax-free return of capital. Funds for such a distribution might come from a cash-out refinance after a development stabilizes.

  • Matthew Rappaport
    October 09, 2020

    No, they are taxed as normal.


    the information found on this website is intended to be general information; it is not legal or financial advice. Specific legal or financial advice can only be given by a licensed professional with full knowledge of all the facts and circumstances of your particular situation. You should seek consultation with legal and financial experts prior to participating in any aspect relating to Opportunity Zones. Posting a question on this website does not create an attorney-client relationship. All questions you post will be available to the public; do not include confidential information in your question.