A Qualified Opportunity Fund is an investment vehicle set up as a partnership, limited liability company, or corporation, aimed specifically at Qualified Opportunity Zones, that are subject to strict requirements and provide certain tax benefits to investors.

In order to create a Qualified Opportunity Fund you must (1) file Form 8996 with the IRS to self-certify as a Qualified Opportunity Fund and (2) make sure at least 90% of the fund’s assets are located in Qualified Opportunity Zones. Click here for more detail.

A map of Qualified Opportunity Zones can be found at https://www.cims.cdfifund.gov/preparation/?config=config_nmtc.xml

There are two significant tax benefits available to individuals who invest in Qualified Opportunity Funds.

First, an investor may defer paying taxes on capital gains until December 31, 2026 if the capital gains are invested in a Qualified Opportunity Fund.

Second, if the capital gains are left in a Qualified Opportunity Fund at least ten (10) years, then the investor will not pay capital gains tax on any appreciation of the asset. Click here for more details and examples.

Any type of capital gain may be invested in a Qualified Opportunity Fund, including, real estate, stock, cryptocurrency, artwork, etc. An investor must reinvest capital gains into a Qualified Opportunity Fund within 180 days in order to qualify. Click here#3 for more details.

A Qualified Opportunity Fund may invest in real estate located in Qualified Opportunity Zones, including existing businesses, vacant or abandoned property and/or raw land.

The Qualified Opportunity Zones have already been finalized by the government. Although you may not form a new Qualified Opportunity Zone, you may invest in existing Qualified Opportunity Zones individually or through a Qualified Opportunity Fund.

A Qualified Opportunity Zone business is a business located within a Qualified Opportunity Zone that holds at least 70% of its assets in a Qualified Opportunity Zone.