The opportunity zones (OZ) incentive has been part of the federal tax code for less than a year, but early participants are setting the groundwork to facilitate and make qualified opportunity fund investments in distressed communities.
Time is of the essence. Qualified investments allow taxpayers to defer taxes on their gains until the end of 2026, but they get a step-up in basis only if they hold fund shares for at least five years–with larger step-up at seven years. That means investments need to be made by the end of 2021 to qualify for the minimum incentive to reduce their required 2026 tax payment. The Novogradac Journal of Tax Credits spoke with a few early OZ participants about their planned investments and the flexibility of the incentive.