Opportunity Zone Investment Deadline Extended

Typically, taxpayers that want to defer paying taxes on capital gains must reinvest their realized gain into a Qualified Opportunity Zone Fund within a 180 period after the date of sale.  Due to the pandemic, the 180 period was extended last year until 12-31-2020. 

The IRS has released a notice that further extends the deadline to March 31, 2021. 

What This Means to Investors

Taxpayers whose 180-day period ended on or after April 1, 2020 now have until March 31 of 2021 to reinvest their capital gain to get the deferral and reduction in their capital gains taxes-and the tax free investment in the OZ Fund. 

Qualifying gains are those realized on or after October 4, 2019 by individuals.  For taxpayers wanting to reinvest a gain from a partnership, the new deadline applies to recognized partnership gains on or after January 1, 2019.

The extension is automatic.  Taxpayers will need to make a valid deferral election using forms 8949 and 8997.

What This Means to Opportunity Zone Funds

Various deadlines and testing requirements for Qualified Opportunity Zone Funds were also extended. This will provide relief to the funds and prevent the possible loss of a fund’s “opportunity zone” benefits due to delays caused by the pandemic.

For questions on your specific circumstances, please contact us for a brief call.

Sources:

Kyle C. Griffin, “Extension of Relief for Qualified Opportunity Funds and Investors Affected by Ongoing Coronavirus Disease 2019 Pandemic,” IRS.gov, Accessed January 29, 2021, (Source)