Qualified Opportunity Fund – a 1031 Exchange Alternative
Defer capital gains tax – not just on real estate sales
If a property owner opts to forgo a 1031 exchange or misses a deadline resulting in a failed exchange, there is another alternative: investing the sales proceeds into a Qualified Opportunity Fund (“QOF”).

This tax-saving vehicle is not just a 1031 alternative, but available to anyone selling an asset which will result in a capital gain; for example, the sale of a business, stock or bond. A taxpayer with capital gains can defer capital gains tax if they sell their appreciated assets and, within six months, roll over the profits into a QOF.

How does it work?
The Tax Cuts and Jobs Act passed in 2017, allowed states to designate Qualified Opportunity Zones (QOZ); areas needing economic development. A taxpayer may defer taxes by investing unrealized capital gains in a Qualified Opportunity Fund (QOF), which in turn invests in real estate and/or business located in Qualified Opportunity Zones. To be eligible, within 180 days of a sale you would need to roll-over the gain (just the gain, not your cost basis) into a QOF and the QOF must use that cash to purchase Qualified Opportunity Zone Property. There is no dollar limit on the amount of gain that can be deferred or excluded under this program.