April 30

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Resource: Qualified Opportunity Zone Funds vs. 1031 Exchanges

This resource is credited to Griffin Capital.


QOZ Funds

1031 Exchanges

Eligible Gains

Any capital gain, regardless of the asset that generated it

Limited to gains from real property held for investment or used tin a trade or business

Reinvestment of Proceeds

Only reinvest capital gain; can reinvest basis but it will not receive tax benefits

Must reinvest all proceeds and have same or great amount of debt

Time Period to Reinvest

180 days (with certain exceptions); gain must be triggered on or before 12/31/2026

45-day identification period and 180 day reinvest period; no investment deadline

Replacement Asset

Qualified Opportunity Fund (invests 90% of assets in QOZ Property)

Real property; must be "like-kind"

Location of Replacement Asset

Designated Opportunity Zones

50 U.S. states, D.C., Guam and Virgin Islands

Qualified Intermediary

Not necessary

Generally required to hold proceeds or property

Minimum Holding Period

At least 10 years to achieve maximum tax benefit

None, but subject to "held for" requirement

Deferral of Capital Gain Tax on Relinquished Asset

Deferred until 2026; 10%/15% step-up in basis after 5/7 year holding period

Deferred indefinitely; may be eliminated upon investor's death

Tax on Gain Generated by Replacement Asset

Eliminated if held 10 years; may be eliminated upon investor's death

Due upon sale of asset; may be eliminated upon investor's death


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