Deferral of your original gain
When you realize a capital gain and reinvest it into a Qualified Opportunity Fund within 180 days, you defer tax on that original gain. Only the gain portion needs to be reinvested — unlike a 1031 exchange, you can keep your original basis.
Tax-free appreciation after 10 years
The headline benefit: if you hold the Opportunity Fund investment for at least 10 years, any appreciation on the fund itself can be permanently excluded from tax when you sell. The new growth escapes capital gains entirely.
How it compares to a 1031
A 1031 exchange defers gain on real estate rolled into like-kind real estate and requires reinvesting all proceeds. An Opportunity Zone lets you reinvest only the gain, works for gains from any asset class, and adds the 10-year exclusion — but the deferred gain generally becomes due at the end of 2026 under current rules, so timing matters.
Frequently asked questions
How much do I have to reinvest?
Only the capital gain, not the full sale proceeds, and generally within 180 days of realizing it.
What is the 10-year benefit?
Hold the Opportunity Fund investment 10 years and appreciation on the fund can be excluded from tax when you sell.
How is it different from a 1031?
A 1031 needs like-kind real estate and full reinvestment; Opportunity Zones accept gain from any asset, reinvest only the gain, and add a 10-year exclusion.
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.