Top 5 Frequently Asked Questions About
Opportunity Zone Investments

What is an Opportunity Zone?

‍Opportunity Zones are economically distressed communities where new investments may be eligible for preferential tax treatment under certain conditions. These zones are designed to spur economic development and job creation.
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How do Opportunity Zones work?

‍Investors can receive tax benefits by investing capital gains into Qualified Opportunity Funds (QOFs) which then invest in Opportunity Zones. The benefits include deferral of capital gains taxes until the investment is sold or until December 31, 2026. Investments held for at least five years are eligible for a 10% step-up in basis, increasing to 15% if held for seven years. If the investment in the QOF is maintained for at least ten years, investors may be eligible for a permanent exclusion from taxable income on new gains from the investment.
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What types of investments qualify for an Opportunity Zone Fund?

‍A Qualified Opportunity Zone Fund can invest in a variety of assets within an Opportunity Zone, including real estate, infrastructure, and local businesses. The primary requirement is that the investments increase employment and economic growth within the zone.
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What are the risks associated with investing in an Opportunity Zone Fund?

‍Risks include market volatility in real estate, potential illiquidity, and the complexities of regulatory compliance. Additionally, there's the risk that the anticipated economic growth in the Opportunity Zone doesn’t materialize as expected, which could affect the return on investment.
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Are there any special requirements for establishing an Opportunity Zone Fund?

‍To qualify as a Qualified Opportunity Fund, the fund must invest at least 90% of its assets in eligible property located within an Opportunity Zone. The fund must be certified by the IRS and structured as either a partnership or corporation for the purpose of investing in eligible property.