As tax payment time approaches and individuals are adjusting to the reality that tax liabilities are higher as a result of the Tax Cuts and Jobs Act of 2017 (the “Act”), one area of relief lies in Opportunity Zones where individuals can defer tax on capital gains until 2026 provided the capital gains are invested in Qualified Opportunity Zone Property (“QOZP”) or in a Qualified Opportunity Zone Business (“QOZB”). For investors who elect to defer capital gains to reduce their 2018 tax liability, there are numerous requirements to maintain the deferral.
First, a taxpayer has 180 days from the date the capital gain was realized to make the deferral election. For taxpayers looking to defer gains reported on a K-1, the investor has 180 days from the end of the year to make the deferral election. Once the deferral is made, the taxpayer has 180 days or less, depending on the date of deferral, to have 90% of their deferred assets invested in a QOZB or QOZP.
When a taxpayer defers a gain, t...more