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What is a Qualified Opportunity Zone?

If you are interested in buying in a neighborhood going through revitalization, there are plenty of benefits that you can use to make the most of your purchase. Through the Qualified Opportunity Zone program, people buying in these areas through designated funds get major tax benefits.

What is a Qualified Opportunity Zone

The History of the Qualified Opportunity Zone

The program began in 2017 and is set to run through 2047. During this 30-year span, Qualified Opportunity Zones are identified that are historically low-income and less desirable places to buy property. As people buy in these neighborhoods, money is invested in the community which promotes overall economic growth.

It is focused primarily on real estate investors. Typically, these neighborhoods are not as stable as other more established areas. It can be difficult to get and keep tenants, both residential and retail businesses. So investors shy away and buildings are left vacant, which further drives down property values.

About the Qualified Opportunity Zone

Qualified Opportunity Zones allow investors to lessen or even eliminate their capital gains tax if they buy and later sell a qualifying property. Normally, people have to pay a high tax rate on any profit when they sell real estate if it is within a certain time frame. But in a Qualified Opportunity Zone, that capital gains tax can be deferred if the profit is rolled forward into another investment. If the person keeps the property for at least 10 years before selling, the capital gains tax can be completely eliminated.

There are specific stipulations when it comes to investing in a Qualified Opportunity Zone, including how the business is structured. It is a good idea to work directly with a lawyer and CPA who are familiar with the process. A great real estate agent can also help you identify potential properties that will work for your needs.

Andrew Finney
About the Author

Andrew Finney

Loan Officer at America First Mortgage · NMLS #2595842

My journey in the financial and real estate sectors began after proudly serving in the United States Marine Corps from 1999 to 2008. The discipline, commitment, and integrity I developed during my military service and growing up on a farm in Roswell, NM, have shaped my approach to mortgage lending. I understand the importance of dedication and hard work and bring these values to every client I serve.

Specializes in: Non-QM (Bank Statement, P&L, Alt-Doc 1099), VA Home Loans & VA IRRRL Streamline, DSCR & Investor Cross-Collateralization
Licensed in: CO, NV
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