Real Estate Investors

Real estate investors facing a capital gains event often face the time pressure, reinvestment constraints, and operational headaches of a 1031 exchange.

Opportunity Zones offer a more flexible alternative, allowing investors to reinvest capital gains on their own timeline while gaining tax deferral and an enhanced return profile through potential tax-free appreciation through long-term holds and the use of depreciation without recapture.

Investors can preserve capital, improve after-tax returns, and align their investment with long-term value creation without being forced into a rushed or suboptimal deal.

OZ vs 1031 Exchanges

The key differences between a 1031 exchange and Opportunity Zone investing lie in flexibility, tax treatment, and asset requirements.

A 1031 exchange allows real estate investors to defer capital gains taxes by reinvesting proceeds into a like-kind property, but it must be real estate-for-real estate and follow strict timelines and rules. In contrast, Opportunity Zone investing offers more flexibility, as investors can roll over capital gains from the sale of any asset—not just real estate—into a Qualified Opportunity Fund (QOF), which can invest in real estate or businesses within designated Opportunity Zones.

While both strategies offer tax deferral, Opportunity Zones provide the added benefit of potentially eliminating capital gains on the new investment if held for 10 years, making it a powerful diversification and long-term tax planning tool.

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About the Opportunity Zone Program

Qualified Opportunity Zones (OZ) were created as part of the Tax Cuts and Jobs Act of 2017.

These zones were designed to spur economic development and job creation in communities throughout
the country by providing tax benefits to investors with eligible capital gains.

The OZ program incentivizes long-term investment to revitalize underserved, often underdeveloped
communities across the U.S.

Eligible Gains

Investors have 180 days from the day the capital gains event occurs to invest into a Qualified Opportunity Zone Fund.

OZ Tax Benefits*

*These tax benefits are associated with the current OZ program (OZ 1.0), effective through 12/31/2026.

HAVE MORE QUESTIONS? CHECK OUT ALL OUR OZ FAQS

Download Our OZ Case Study For Sale of Real Estate

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About Us

Pinnacle Partners is an SEC-Registered Investment Advisor (RIA) focused on tax advantaged private real estate investment opportunities; specifically, through Qualified Opportunity Zones and workforce housing developments, in partnership with 50+ RIAs and hundreds of individual investors. Pinnacle has capitalized over $1B in multifamily development projects, including more than 2,400 units of multifamily housing, and sources off-market opportunities with best-in-class development partners.

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Exploring alternatives to 1031 exchange? Discover more flexible, tax-efficient strategies.

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Exploring alternatives to 1031 exchange? Discover more flexible, tax-efficient strategies.

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Blake Backer
Principal & Vice President,
Investor Relations
Western Region
blake@pinnacleoz.com
425.736.7084

John “JB” Menefee, CFA
Director of Investor Relations
Eastern Region
john@pinnacleoz.com
541.610.5671