A qualified opportunity zone (also known as a QOZ) is a program that was established under the Tax Cuts and Jobs Act of 2017 with the idea of providing a tax incentive for real estate investors to invest their money in low-income areas.
These funds can use the investors’ money for a variety of reasons, including but not limited to: - Converting vacant homes for single-family rental units - Improving abandoned lots for commercial or residential use
If investors with gains were to consider investing in a QOF today, then they could still: - Defer their capital gains until December 31, 2026 - Remove any tax liability on capital gains realized from a QOZ if holding for 10+ years
Some QOZ pros include: - Tax breaks - Tax deferral - Improves low-income communities Some QOZ cons include: - Illiquid investment (minimum of 5 years) - Many investment options with little oversight