As a result of the COVID-19 pandemic, on April 9, 2020 the IRS automatically extended the deadline until July 15, 2020 for reinvesting a Qualified Opportunity Zone (QOZ) gain whose 180-day period fell between April 1, 2020 and July 15, 2020. Now, due to the continuation of the pandemic, the IRS on June 4, 2020 automatically extended this deadline to December 31, 2020.
A Qualified Opportunity Fund (QOF) is generally an investment vehicle that (i) is organized as a corporation or a partnership for the purpose of investing in a QOZ property (other than another QOF) and (ii) holds at least 90% of its assets in QOZ property. The benefit is that taxpayers can elect to temporarily defer inclusion of capital gains in gross income when those capital gains are reinvested in a QOF. This tax strategy also allows the permanent exclusion of capital gains from the sale or exchange of an investment in a QOF when certain parameters are met.
Note that there are very specific guidelines and deadlines associated with this sort of investment opportunity. If you would like to explore this opportunity, please reach out to your accountant to see if this would be a good fit for your situation. Keep in mind that this opportunity can be utilized to defer gain on any type of investment (such as gains from the sale of real estate or gains from the sale of stocks and bonds) and for both short term and long term gains.
