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Originally Posted by jimcav
I'm trying to find out more on Qualified Opportunity Funds (QOF) that invest in Qualified Opportunity Zones. You have 180 days from when you realize your capital gains on the property.
It allows you to take your capital gains, invest it in the QOF, and you then delay the taxes you owe until 2026, but also reduced by 10%. If you keep the investment there for 10 years, then anything you make owns NO taxes at all on the gains.
Problem for me is QOFs are very new, most only got going in 2019, and I am having trouble finding out much about them. IF anyone has any advice on them, I'd appreciate it.
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Hi, I've been researching all things Opportunity Zones for the past year, and should have a report coming out in the next month or so.
To invest in a QOF, you're generally going to have to be an accredited investor (so net worth of >$1 million or $200k annual income), and you're going to need to have capital gains.
You're right, it is hard to get good information on the funds. The specific funds are all new because the program is new, though some are managed/affiliated with entities that have been managing funds for much longer. Novogradac has the most comprehensive listing of funds out there, but their list is still incomplete. Still, if you reach out to funds on the list, you may be able to get more information.
https://www.novoco.com/resource-cent...-funds-listing
Investments in Opportunity Zones thus far have been principally real estate, and the investors tend to be experienced real estate investors. While the tax benefits can be quite good, it is important to remember that investing in a QOF is not like investing in ETFs, mutual funds, or publicly traded stocks. Your money will likely be tied up for 10 or more years, and will likely all be tied up in a single project without any within-fund diversification. Many of these funds may be completely new to fund management. That's why you have to be an accredited investors--you're expected to have some level of sophistication, and also resilience if the fund goes bust.
To narrow down your search, you may want to think about what kind of projects you want to invest in? Do you want to invest in residential real estate, commercial real estate, operating businesses? Do you specifically want to do any "impact investing" or just search out the highest return? You need to figure out what you want out of the program, and how much you're able/willing to invest before you can find a fund that aligns with your goals.
*standard disclaimer, I am not a lawyer, accountant, or registered investment advisor--I am not making any specific recommendations for you, or advising you on what would be best for your specific circumstances. I am only providing you information about the program so you can make more informed decisions for yourself.