Definition
A Qualified Opportunity Fund is the investment vehicle through which capital is deployed into Opportunity Zones to access the related tax benefits.
How It Works
An investor rolls a realized capital gain into a Qualified Opportunity Fund within 180 days to defer tax on that gain. The fund invests in Opportunity Zone property or businesses, and a long enough hold can make the fund's own appreciation tax-free.
Example
An investor places a $400,000 gain into a Qualified Opportunity Fund, defers the original gain, and after the required hold owes no tax on the fund's appreciation.
When It Works Best
It works best for investors with sizable realized gains and a long investment horizon.
Who It Applies To
Investors with capital gains to reinvest, typically accredited.
Watch-Outs
The fund must meet investment and asset tests, deadlines have shifted over time, and the underlying projects carry real risk. This is the vehicle behind the Opportunity Zone strategy.
