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Ezra Dyckman and Aaron S. Gaynor

In December, we shared with you qualified opportunity zone (QOZ) talking points for your holiday get-togethers. In April, Treasury released a second set of proposed regulations concerning QOZs. Ahead of your Fourth of July BBQ, we offer you these small “bites,” to nibble on with your hot dogs and potato salad.

Investment in QOZs, Generally

In order to make a qualifying investment in a QOZ, an investor generally must “reinvest” capital gain into a special investment vehicle (called a “qualified opportunity fund” or “QOF”) within approximately six months of the sale of property that triggered that capital gain. An investor who makes a qualifying investment into a QOF receives up to four benefits: (1) deferral of paying tax on the reinvested gain until as late as 2026; (2) after five years, reduction of the deferred gain by 10 percent; (3) after seven years, reduction of the deferred gain by an additional 5 percent; and (4) after 10 years, permanent exclusion from tax of any additional gain on the sale of the investor’s interest in the QOF.

 

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