Opportunity Zones are low income census tracts nominated by governors and certified by the U.S. Department of the Treasury into which investors can now put capital to work financing new projects and enterprises in exchange for certain federal capital gains tax advantages.

The country now has over 8,700 Opportunity Zones in every state and territory.

Qualified Opportunity Funds are unique investment vehicles that enable investors to take advantage of new tax incentives when investing in businesses and properties located in Opportunity Zones.

Qualified Opportunity Fund Requirements:

  • Must be certified by the U.S. Treasury Department.
  • Must be organized as a corporation or partnership for the purpose of investing in Qualified Opportunity Zone Property.
  • Must hold at least 90% of their assets in Qualified Opportunity Zone Property.
  • Qualified Opportunity Zone property includes newly issued stock, partnership interests, or business property in a Qualified Opportunity Zone business.


Any partnership or corporation can self-certify as a Qualified Opportunity Fund by filing IRS Form 8996 annually with its federal tax return. Each proposed Opportunity Fund must identify and commit their investments to specific community benefit outcomes. The key is to be able to have a robust audit trail to support the fund’s certification in the event of an IRS challenge.

The Opportunity Zones program offers investors the following incentives for putting their capital to work in low-income communities:

  • temporary tax deferral for capital gains reinvested in an Opportunity Fund. The deferred gain must be recognized on the earlier of the date on which the opportunity zone investment is sold or December 31, 2026.
  • step-up in basis for capital gains reinvested in an Opportunity Fund. The basis of the original investment is increased by 10% if the investment in the qualified opportunity zone fund is held by the taxpayer for at least 5 years, and by an additional 5% if held for at least 7 years, excluding up to 15% of the original gain from taxation.
  • permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in a qualified opportunity zone fund, if the investment is held for at least 10 years. (Note: this exclusion applies to the gains accrued from an investment in an Opportunity Fund, not the original gains).

Absolutely not. Instead of thinking, “How long do I have to hold this?” you should be thinking, “How long can I hold this?” The IRS has basically created what we have termed the OZ Self-Directed Super Roth IRA™ with the Opportunity Zone incentive. You get to invest with tax-advantaged dollars. The appreciation on the new investment grows tax-free, and (if held for 10+years) the money comes out tax-free as well. Tax-free compounding is the eighth wonder of the world, as it is a significant wealth creation opportunity. Investors should be figuring out how they can keep their investments inside of such tax-advantaged vehicles for as long as possible.

Qualified Opportunity Funds (QOFs) can invest in any Qualified Opportunity Zone Property (QOZP), including stocks, partnership interest or business property (so long as property use commences with the fund, or if the fund makes significant improvements to the qualifying property). The typical best practices structure is for the QOF to own a Qualified Opportunity Zone Business (QOZB), which owns Qualified Opportunity Zone Business Property (QOZBP). See the below answer for additional information.

No, an investor can invest in a Qualified Opportunity Zone Business (QOZB) only through a Qualified Opportunity Fund (QOF) in order to qualify for associated tax incentives.


If you would like to inquire about our fund and investment opportunities we have for you, or to learn more about anything else, contact us here.