In December 2018 and June 2019, we shared with you qualified opportunity zone (QOZ) talking points for holiday parties and Fourth of July BBQs. Since June, Treasury has released final QOZ regulations, which were published in January of this year. Here, we present to you updated (non-season–specific) QOZ talking points reflecting these final regulations, which were generally taxpayer favorable.

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 a certain 180-day period. An investor who makes a qualifying investment into a QOF receives up to three benefits: (i) deferral of paying tax on the reinvested gain until as late as December 31, 2026; (ii) after five years, effective reduction of the deferred gain by 10 percent; and (iii) after 10 years, effective permanent exclusion from tax of any additional gain on the sale of the investor’s interest in the QOF. (Formerly, there was a fourth benefit: After seven years, effective reduction of the deferred gain by an additional 5 percent. However, this benefit effectively expired on January 1, 2020, as after that date there was less than seven years until December 31, 2026.)