DFW REI Club

 Dallas/Fort Worth Real Estate Investor Club

Opportunity Zone investment (new tax code) similar to 1031 exchanges?

  • 12 Apr 2019 12:04 PM
    Message # 7279706

    I was wondering about this new part of the tax code.  Opportunity Zone investments (via a trustee or fund /REIT perhaps) appears to have the potential to take appreciated property (profits) and roll them into another long term investment (10 years to be fully deferred).


    https://www.irs.gov/newsroom/opportunity-zones-frequently-asked-questions


    https://www.irs.gov/forms-pubs/about-publication-544


    Obviously all the CPAs we know are working toward the deadline of April 15 but this could be a topic worthy of some looking into.


    Thanks


    Terry Lekies,

    817-412-0939


  • 14 Apr 2019 4:25 PM
    Reply # 7282032 on 7279706
    Robin Carriger (Administrator)

    Terry,

    Are you just asking if someone can verify that your interpretation is correct?

    Thanks,

    Robin

  • 15 Apr 2019 9:07 AM
    Reply # 7283005 on 7279706

    Hi Terry, I've seen this referenced a lot lately too.  I think to a person who does not know anything about 1031 exchanges this would sound very attractive but the 1031 exchange does have some considerable upsides to it that the "opportunity zones" do not.

    For a Qualified Opportunity Fund, you can only defer your tax until December 31, 2026....or whenever you sell the property.  A 1031 you can defer it much longer.

    A 1031 you can also invest in "like kind" real estate - so even commercial can qualify and just about any location too.  Not so with the "opportunity zones".  Opportunity zones are only in select areas AND it must be in residential property.

    However, investments into Opportunity Zones may come from the sale of ANY investment property...whether real estate or investments in the stock market.  That's a pretty big deal.

    There's lots of good information out there and I'll include 2 links below that might be able to help with the understanding of opportunity zones.  Thanks!

    https://fundrise.com/education/blog-posts/what-are-opportunity-zones-and-how-do-they-work#maps

    https://www.wealthforge.com/insights/the-difference-between-opportunity-zones-and-1031-exchanges


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