On rare occasions, a federal program comes along that offers a once-in-a-lifetime opportunity to reap substantial rewards with a little forward-thinking strategy. The Opportunity Zone Program (OZP), part of the federal Tax Cuts and Jobs Act of 2017, will be a game changer for savvy realtors, developers, and individuals with appreciated assets looking to reinvest.
To start, OZP investment monies must be derived from the sale of appreciated assets and, unlike a 1031 exchange, the sale of any asset can be used for reinvestment (e.g., real estate, stocks, bonds, stamps, coins, art, cars, antiques, etc.). The proceeds from the sale must be invested in a Qualified Opportunity Fund (QOF). The QOF must then invest no less than 90 percent of its funds in any Opportunity Zone in the country. The overriding purpose of the OZP is to monetize some of the estimated six trillion dollars in assets in the United States and invest the proceeds in impoverished areas around the country to create jobs, new companies, incubators, and, in short, prosperity.