Real Estate and Construction Newsletter November 2018
Qualified Opportunity Zones Provide an Alternative to the Like-Kind Exchange
One of the more intriguing aspects of the Tax Cuts and Jobs Act of 2017 (TCJA) is the new legislation related to investments within Qualified Opportunity Zones (QOZs). The goal of this new provision is to encourage investment in state specified, low-income communities, or QOZ’s. Taxpayers who sell property to an unrelated party that generates a capital gain can choose to reinvest all or a portion of their proceeds from the transaction within a QOZ to defer, and in some cases, eliminate tax on the gain.
To the experienced investors out there, this may sound a lot like a Section 1031 or like-kind exchange. There are certainly some similarities between the two, but also some key differences that are important to note.