If you have specific questions regarding the qualified opportunity zones, please don’t hesitate to get in touch. This “checklist” should not be relied upon, and is not being presented as, legal advice. This is a complex area of tax law and you cannot base your decisions on a cursory overview of the topic, such as this one.
Under the Tax Cuts and Jobs Act (Pub. L. No. 115-97 (2017)), additions were made to the Internal Revenue Code (the “Code”) to provide for tax benefits for investors that invest in Qualified Opportunity Zones (QOZs). These benefits include:
· Deferred recognition of capital gains for Qualified Opportunity Funds (“QOFs”);
· Reduction in amount of recognized deferred capital gains by an increase in basis; and
· Exemptions from taxation of appreciation in QOFs if requirements are met.
In the attached we have outlined some of the pertinent aspects of QOZ regulations and requirements in order to more succinctly present a checklist of requirements for the creation of a real-estate only QOF.
For clarity, we have omitted any reference or analysis to forming and capitalizing a QOF with an eligible gain, as this is outside the scope of this paper series. We have also not outlined the process of offering QOF investments for sale, for the same reason. These will be the subject of future writing series.