Can Opportunity Zones Be Publicly Traded?

Can Opportunity Zones Be Publicly Traded?
Written By
Carl E. Sera, CMT
Published On
August 15, 2023

Opportunity Zones can benefit investors considerably, and they act as a tool to receive tax benefits and other perks. Can Opportunity Zones become publicly traded? Let’s find out!

What Is an Opportunity Zone?

Qualified Opportunity Zones, or QOZs, are nominated communities certified by the Treasury Department through the state. Every state within the United States has qualified, approved zones through the department. They offer a potential federal capital gains tax incentive to taxpayers who invested in economically distressed areas within the country.

The potential tax benefits include discounts, exemptions, and deferrals from federal capital gains taxes. It has complex rules, so investors should work with tax, financial, and legal advisors to perform due diligence and understand potential risks and benefits.

Rules for Opportunity Zones

Investors who partake in QOZs have 180 days from the date of an appreciated property exchange or sale to invest realized capital gains into QOFs, which file either partnership or corporation federal tax returns for Qualified Opportunity investing. Taxpayers must invest principal returns and recognized capital gains, but only the portion of capital gains investment attribution becomes eligible for tax exemption.

While there are no requirements to invest in like-kin properties, Opportunity Zone programs allow appreciated asset sales to become reinvested into QOFs. As long as taxpayers and investors follow the rules, they can continue tax deferment and receive benefits.

Can Investors Publicly Trade QOZs?

It’s important to note that Opportunity Zones aren’t necessarily traded, as investors put asset sales capital gains directly into QOZs or Qualified Opportunity Zone Properties. Instead, investors direct capital gains into Qualified Opportunity Funds, then invest into QOZPs in federally designated QOZs. Corporations, individuals, and partnerships obtain tax-deferred benefits in return.

QOZs aren’t necessarily traded but rather represent QOZP investment funding vehicles. Furthermore, Opportunity Zone programs aren’t open to the public; they encourage investors with capital gains to put their profits into QOFs. Investors must consider costs, limitations, and long-term hold requirements.

Sera Capital offers its expertise, knowledge, and services to individuals with highly appreciated assets. Our fee-only fiduciaries provide clients with the necessary tools to achieve capital gains tax, promote portfolio diversification, and get a head start on estate planning. Our Qualified Opportunity Zone services can work as a rate-of-return vehicle and taxing savings utilization from asset sales, such as stocks, jewelry, bonds, art, and more. Schedule a free 30-minute call today if you have questions.

Carl E. Sera, CMT

Carl E. Sera, CMT

Managing Principal, Sera Capital
Carl Sera is a Chartered Market Technician and the Managing Principal at Sera Capital Management, LLC. He has over 16 years of experience in the financial services industry with a focus on investment management.

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