The 2018 tax reform laws have created a new investment category: Opportunity Zones. Qualified Opportunity Zone Funds join an increasingly popular group of tax-advantaged investments that allow investors to defer or avoid capital gains taxes on the sale of certain investment properties.
Investments into an Opportunity Zone Fund can provide tax advantages, including deferral, tax basis step up, and no taxes on appreciation, depending on how long the investment is held.
Investments into Opportunity Zone Funds have many similarities to investments into 1031 Exchanges, including tax deferral. However, there are also some significant differences.
In order to capitalize on investor interest, advisors and issuers may want to learn more about this new investment type, including tax considerations and working with a broker-dealer.