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How much of a rush should I be in to invest in an OZ?

I’ve heard I need to invest quickly to maximize my benefits. Is that the case? Could I miss the boat if I wait too long?


Answers
  • Guy Nicio
    July 31, 2019

    There is a 180-day timeline that requires you invest that time period after the capital gain event. There are nuances for certain situations (i.e., partners in partnerships and net Section 1231 gains) whereby the 180 period does not start until after the end of the tax year during which a capital gain recognition event transpired.

  • Kim Taylor
    July 18, 2019

    The current regulations require that to receive the 100% step-up basis on your investment, your funds must be invested by Dec. 31, 2019. There is proposed legislation to extend this date, but it hasn’t been passed yet. Under the current regulations, if you invest past that date, you won’t receive the full step up basis at the end of the investment.

  • Brad Cohen
    July 18, 2019

    General rule is 180 days from recognition of gain date. If the gain was recognized in a pass through or it is 1231 gain, there is additional time.

  • Pietra Zaffram
    July 15, 2019

    The Opportunity Zone program requires investors with eligible capital gains to reinvest them in a Qualified Opportunity Fund (QOF) within 180 days to qualify for the program. In addition, an investor would have to be invested in a QOF by the end of 2019 to maximize the tax exclusion offered by the program — a 15% tax break on the capital gains invested. The end of 2021 is the latest date in which an investor can invest in a QOF and be eligible for the next level of tax breaks, a 10% tax exclusion on the eligible capital gains that are invested in the QOF.

  • David LeGrand
    July 12, 2019

    The optimal time to invest is in 2019, as the deferral is through 2025 and tax due on the deferral in 2016. So each year brings less benefit on the deferral side.

  • Samuel Weiser
    July 12, 2019

    If you have realized gains to invest in an OZ, the sooner you fund your QOF, the sooner your 10-year timeline starts. What is time sensitive is that, as things stand now, any funds invested in a QOF after Dec. 31, 2019, will only realize a maximum 10% reduction in their taxes due at Dec. 31, 2026. Investments in a QOF after Dec. 31, 2019, will not have the ability to be held seven years before the deferral deadline that would increase the tax reduction from 10% to 15%. Once the funds are invested in the QOF, you have time to invest the QOF funds into OZ investments. As a result, there is no rush to invest in an OZ investment until you find a suitable opportunity you like. However, you must get the gains into the QOF within the 180 days after realization.