The Tax Benefit 

Reduction of capital gains

Deferral of recognized capital gains

Elimination of capital gains

If an investor holds a QOZ investment for at least 10 years, then no tax is paid at all on any appreciation of the deferred capital gains in the QOZ investment

If the investor holds a QOZ investment for:

 

  • at least 5 years, then 10% of the deferred gain is permanently forgiven (tax paid on 90% of deferred capital gain)

 

  • at least 7 years, then an additional 5% (total of 15%) of the deferred gain is permanently forgiven (tax paid on 85% of deferred capital gain)

  • defer realized gain from appreciated asset, in most cases an investor must reinvest the gain into a QOF within 180 days of realizing the gain

 

  • The 180-day period ends when capital is contributed to the applicable Qualified Fund, not when capital is committed 

 

  • May defer capital gains tax until the "Recognition Date" defined as the earlier of the date on which the investment is sold or 12/31/2026

Today (2020)
2024
2026
2026 YE
2029 & Beyond

Invest capital in QOZ Fund

Become eligible for 10% tax reduction on deferred capital gains

Become eligible for 15% tax reduction on deferred capital gains

Original Capital Gains Tax Due

No Capital Gains Tax on QOZ Fund Investment appreciation