The IRS has released a second set of proposed regulations on the
new tax incentives for investments in Qualified Opportunity Zones
(QOZs). The incentives, created by the Tax Cuts and Jobs Act,
permit taxpayers to defer, reduce and even permanently exclude
capital gains on their investments. The proposed regulations
— most of which can be relied upon until final regulations
are published — include several provisions that are favorable
for real estate investors.
Incentives in a nutshell
Investors can form private Qualified Opportunity Funds (QOFs)
for development and redevelopment projects in QOZs. The funds must
keep at least 90% of their assets in QOZ property. Qualified
opportunity zone property includes QOZ stock, QOZ partnership
interests or a direct ownership interest in QOZ business property.
QOZ business property includes new or substantially improved
commercial buildings, equipment and multifamily complexes.
