I am moving overseas and need to reorganize my finances. What would my tax impact be if I sell my QOF before Dec. 31?
Yes, you can sell your interest in a QOF at any time (subject to the entity's operating agreement.) Sale of a QOF prior to Dec. 31, 2026 is one of the enumerated "inclusion events" and will trigger the recognition of your deferred gain on your current-year tax return. In addition to the recognition of the previously deferred gain, you would also be subject to tax on any increase in the value of your QOF investment.
This would trigger the gain that you originally deferred into your QOF investment.
You will have to recognize 100% of the deferred gain in 2019 plus any appreciation.
If you sell your QOF without reinvesting into a different QOF, you pay capital gains taxes as normal.
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