In order to enjoy the maximum potential tax benefits of a Qualified Opportunity Fund (QOF), you must invest in a QOF by December 31, 2019. This will allow you to hold the investment for seven years prior to December 31, 2026 and thus receive the maximum 15% reduction in capital gains. Investors may still invest in QOFs after December 31st, but the potential exclusion from tax for invested gains would be limited to 10%, assuming a five year hold prior to December 31, 2026.
More importantly, December 31st is the only day that a taxpayer can invest in a QOF to receive the maximum tax benefits from deferring Section 1231 gains.
The Opportunity Zone rules are new, complex, and untested. Additional guidance is expected from the IRS in the coming weeks. While there are many articles and resources online, we highly recommend that you work with your CPA and Tax Attorney when considering investment in a QOF. Timing will be key to ensure that you receive the tax benefits allowed under these new rules.
If you have further questions about investing in Qualified Opportunity Zones, contact a Clark Nuber real estate professional.
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