What are the rules for the QOF to reinvest and be able to defer the taxable gain within the 10-year holding period?
While there are provisions to be able to reinvest the gain without triggering failure of the investment standard the QOZ program does not allow for exclusion of gains during the 10 year hold. This could only be satisfied by using other gain deferral mechanisms such as Sec 1031.
Sales by a QOF of QOZP prior to the ten-year mark come with regular tax consequences, so you will need to use a deferral technique to avoid recognition of taxable income. These techniques include Section 1031 and Section 1045 exchanges. You will need to consult tax counsel to structure one of these.
The QOF has 12 months to reinvest into a new qualified zone business property.
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