Another significant change resulting from the 2018 tax reform is the brand new Opportunity Zone Program. In order to promote investment in certain geographical areas, the IRS has identified several areas that are considered “Opportunity Zone” areas. For taxpayers who sell real estate or stocks that result in capital gains, the tax on the gains may be deferred if they are re-invested in Opportunity Zone funds within 180 days of the sale of the asset. In addition to the deferral of capital gains taxes, part of the future appreciation on the Opportunity Zone investment may also receive tax-free treatment as well. This tax benefit may be a good fit for taxpayers who are looking to sell rentals or stocks for a gain and interested in re-investing those funds in the Opportunity Zone area. Many of the details on the Opportunity Zone are still unclear at this time although the IRS does have a Frequently Asked Questions page regarding this new tax benefit. Here is a Link to the areas where properties currently qualify for Opportunity Zone tax deferral.
State County Census Tract Number
California San Francisco 06075017902
California San Francisco 06075023103
California San Francisco 06075023400
California San Francisco 06075026001
California San Francisco 06075026004
California San Francisco 06075026100
California San Francisco 06075026301
California San Francisco 06075026404
California San Francisco 06075060502
California San Francisco 06075061200
California San Francisco 06075980600
California San Mateo 06081600200
California San Mateo 06081610201
California San Mateo 06081610500
California San Mateo 06081612100
California Santa Clara 06085500800
California Santa Clara 06085500901
California Santa Clara 06085501000
California Santa Clara 06085501401
California Santa Clara 06085501600
California Santa Clara 06085503110
California Santa Clara 06085503122
California Santa Clara 06085503305
California Santa Clara 06085503401
California Santa Clara 06085503601
California Santa Clara 06085505100
California Santa Clara 06085512603
California Santa Clara 06085512604
Many more in CC and Alameda counties. Download that spreadsheet to find out. All are low income areas.
California already had something like this. It was called the Enterprise Zone Credit.
Find the intersections and you don’t pay federal as well as state taxes. Double win.
Jerry Brown repealed the Enterprise Zone Credit a while back, so at most you can get one such credit only. Can’t double dip.
Then why are you teasing me like that? 
What do you expect from a millennial???
Apparently I am on everyone’s hit list. Go ahead, I love being the villain 
(oh hey there are some new emojis!)
Got an ad in my mailbox. Monthly rent $5,400, asking 895K. Rent is very strong for that price.
1753 16th Ave is a fully rented fourplex located in Oakland’s San Antonio district and within close proximity of a vibrant commercial zone with restaurants, shops and services. Originally built in 1893, this building consists of two 2 bed/1 bath units and two 1 bed/1 bath units. The property presents an opportunity for immediate cash flow with significant rental upside.* All tenants are on month-to-month leases with most at below market rents. This allows for the next investor an opportunity to raise rents upon turnover and increase cash flow.* All units are separately metered for PG&E.
- 1749 (Upstairs): 2BD/1BA - 1,063 sq. ft.** - $1,500/mo
- 1751 (Downstairs): 1BD/1BA - 635 sq. ft.** - $900/mo
- 1753 (Downstairs): 1BD/1BA - 1,080 sq. ft.** - $1,500/mo
- 1755 (Upstairs): 2BD/1BA -1,052 sq. ft.** - $1,500/mo (OHA Sec 8)
- On-site laundry & storage
- 1.7mi to the Lake Merritt & Fruitvale BART Stations
- Convenient freeway access
- Located in a Qualified Opportunity Zone
*Buyer to investigate with Oakland RAP regarding deferred allowable rent increases.
What do you think is going to happen to Oakland Coliseum? Will a tech company buy the land?
My CPA reminded me I could put my stock gains into an Opportunity Zone Fund and defer the capital gain tax. Apparently I knew about it but completely forgotten…
Q. I sold some stock for a gain in 2018, and, during the 180-day period beginning on the date of the sale, I invested the amount of the gain in a Qualified Opportunity Fund. Can I defer paying tax on that gain?
A. Yes, you may elect to defer the tax on the amount of the gain invested in a Qualified Opportunity Fund. Therefore, if you only invest part of your gain in a Qualified Opportunity Fund(s), you can elect to defer tax on only the part of the gain which was invested.
Q. How do I elect to defer my gain on the 2018 sale of the stock?
A. You may make an election to defer the gain, in whole or in part, when filing your 2018 Federal Income Tax return. That is, you may make the election on the return on which the tax on that gain would be due if you do not defer it.
Q: Can I transfer property other than cash as an investment to a QOF?
A: Yes. A taxpayer can transfer property other than cash as an investment to a QOF. However, a transfer of non-cash property may result in only part of the investment being eligible for Opportunity Zone tax benefits, so that not all of the taxpayer’s capital gain is able to be deferred. See proposed regulations §1400Z2(a)-1(b)(9) & (10).
If you have capital gain under your own name, can you buy a property in opportunity zone as a corporation to defer tax? It’s required to buy properties in opportunity zone as a corporation not individuals.
If it’s required to have the same entity to sell stocks and buy opportunity zone real estate, it would not apply for most people since very few people hold stocks under corporation name.
It seems that you can sell your stock and RE and invest the capital gain but not the principal in an opportunity fund. This will be an indirect ownership and you will have to rely on the opportunity fund to manage the property as a partial owner.
Also it’s not clear whether the opportunity fund has to complete certain amount of development to qualify. It may not be enough to simply buy a rental property in an opportunity zone.
I think there could be fraud, conflict of interest and heavy management fees. Not sure if it’s worth the trouble. Plus your CPA may get a fat referral fee.
Not sure if it’s as bad as IUL. The underperformance of an opportunity fund may get you less after tax money after many years of poor performance and heavy management fees.
Great explainer on OZ:
The Top 10 Opportunity Zones in the US
https://fundrise.com/education/blog-posts/the-top-10-opportunity-zones-in-the-united-states