Just last month, the Internal Revenue Service announced a new deadline for participating in qualified opportunity zone funds. Typically, taxpayers have a 180-day window to defer taxes on capital gains by investing in low-income or under-developed communities across the country. However, if that window closed anytime after April 1, 2020, you now have until March 31, 2021 to make an investment in a QOZ fund. Investors who generated gains on or after Oct. 4, 2019 but before Oct. 2, 2020 could benefit from the extended deadline for this tax-advantaged investment opportunity.
QOZ funds were developed as an incentive to encourage private investment in three types of opportunity zone projects: developing new commercial real estate properties, fixing up older ones, and opening start-up businesses such as dry cleaners or restaurants. Given the thousands of businesses struggling to recover from the COVID-19 pandemic, the extended deadline makes available to qualified businesses one more avenue of financial relief.
In December 2019, we recapped on our blog many of the year-end opportunities associated with QOZ funds and explained some basics of how they work. And this article does a good job highlighting relief found in the IRS’s new guidance. However, QOZ funds can be a complicated subject, so it’s best to discuss participation with your accountant and financial advisor. This intersection of tax and investment is what we’re all about at Carey & Hanna, and we’re eager to help you maximize newly available opportunities.