Taxes play a significant role in the bottom line for commercial real estate investors, therefore any chance to delay or eliminate tax consequences of a transaction are generally pursued in earnest.
We have had the Internal Revenue Code (IRC) Section 1031 allowing for tax deferral of like-kind exchanges since 1954. There have been amendments over the years, but the basics of rolling the capital gains from one investment property into another without any tax consequences remain the same.
The Qualified Opportunity Zone (QOZ) provides the investor with another potential method of reducing or not paying capital gains taxes, but like most things involving the IRS, it’s complicated.
What is the QOZ?
The 2017 Tax Cuts and Jobs Act created a new section of the IRC that provides tax incentives for real estate investors who invest in QOZs of the US through a Qualified Opportunity Fund (QOF).Read More