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How does the gain exclusion on appreciation in Opportunity Zones work?


Answers
  • Brett Siglin
    May 12, 2022

    The gain on appreciation is excluded after 10 years. This is the primary reason for investing in a QOF.

  • Marko Belej
    May 11, 2022

    The 10-year gain exclusion applies to an investor's qualifying interest in a qualified opportunity fund (QOF). If the investor disposes of the qualifying interest at least 10 years after acquiring the interest but before January 1, 2048, then the investor generally can elect to step up his basis in the qualifying interest to its then fair market value, thereby avoiding the recognition of any gain. In the event of an asset sale by the QOF or any qualified opportunity zone business (QOZB) in which the QOF has invested, special rules may permit the investor to get a similar step-up in the basis of the assets, if the QOF or QOZB is a partnership or S corporation. Note that an interest in a QOF is a "qualifying interest" if it was acquired by the investor for deferred gains and has not previously experienced an inclusion event.

  • Ronald  Weisfeld
    May 10, 2022

    Generally speaking, if you hold the asset more than 10 years at the time of sale, your taxable basis is stepped up to 100% of the assets value. Thereby no taxable gain or recapture at the time of sale.

  • David LeGrand
    May 10, 2022

    If held for ten years and sold, at the sale the cost basis of the investment is increased so there is no gain on the sale.

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