Investments in Qualified Opportunity Zones (“QOZs”) have three main federal tax advantages:
To take advantage of the deferral available, cash equal to the deferred capital gain amount needs to be invested into a QOF within 180 days of the date of the transaction generating the gain. There are special rules for gains allocated to partners in partnerships or shareholders in S corporations.
For 2020, there is some relief available due to the on-going global pandemic. If the 180 day reinvestment period ends between April 1, 2020, and December 31, 2020, the 180 reinvestment period is automatically extended until December 31, 2020. As a result, taxpayers with capital gains from late 2019 or early 2020, who were believed to be out of time to reinvest those capital gains and defer taxation on them under the QOZ program, can now reinvest those gains and receive the tax deferral benefits.
For questions or further information, contact a member of our Tax Services Team.