A Qualified Opportunity Fund (QOF) is an investment vehicle that was created as a part of the 2017 Tax Cuts and Jobs Act (TCJA) to encourage private investment in economically distressed communities known as Opportunity Zones.
Opportunity Zones are designated areas in the United States that have been identified as economically distressed and in need of investment. To encourage investment in these areas, the TCJA created tax incentives for investors who invest in QOFs that, in turn, invest in businesses or property located in Opportunity Zones.
To qualify as a QOF, a fund must invest at least 90% of its assets in businesses or property located in Opportunity Zones. Investors who hold their investment in a QOF for at least 10 years may be eligible for significant tax benefits, including the exclusion of capital gains tax on their investment in the QOF.
QOFs provide a unique opportunity for investors to support economic development in communities that are in need of investment while potentially benefiting from tax incentives. If you’re interested in learning more about QOFs and how they may fit into your investment strategy, our team at 1031 Exchange Place is here to help.