Qualified
Opportunity Fund

A Gain Was Realized…
Now What Comes Next?

  • A business is sold.
  • A property is divested.
  • A stock position is liquidated.
  • The result is the same: a capital gain.

“Now what do I do?” becomes—and for many, “what can I do?”

Get structured for tax-free reinvestment into a Qualified Opportunity Fund (QOF).

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What Is a Qualified Opportunity Fund?

A Qualified Opportunity Fund is an investment structure created under the Tax Cuts and Jobs Act of 2017 to encourage investment into designated communities called Opportunity Zones.

A QOF is typically structured as a:

  • partnership, or
  • corporation

Invests primarily in real estate or operating businesses located in these zones

To qualify, the fund must generally hold at least 90% of its assets in Opportunity Zone property

What Type of Gains May Be Eligible?

QOF strategies are generally considered when gains are realized from:

The sale of stock

The sale of a business

The sale of real estate

Only the capital gain portion is eligible for the tax treatment.

How It Works

A gain is realized

An asset is sold, creating a taxable capital gain.

180-day reinvestment window

The investor has 180 days to reinvest the gain into a QOF to be eligible.

Gain is deferred

Taxes on the original gain may be deferred until the earlier of the sale of the QOF Investment or December 31, 2026—or excluded if the investment is held longer.

Holding Periods and Potential Tax Treatment

The length of time the investment is held may affect the tax treatment available under applicable rules. See our disclosure for more.

Potential Tax Considerations

The potential tax treatment depends on timing, holding period, and the applicable QOF framework.

Under the Current Framework

  • 5 years: May increase basis by 10% of the deferred gain
  • 7 years: May increases basis by an additional 5%, for a total potential increase of 15% of the deferred gain
  • 10 years: May allow the investor to elect to adjust the basis to fair market value when the QOF investment is sold or exchanged, subject to applicable limits

Under the Post-2026 Framework

  • 3 years: Gain generally realized on the fifth anniversary; if the investment is sold, earlier QOF investments first
  • 5 years: Regular QOF investments held at least five years may receive a 10% tax reduction
  • Qualified Rural Opportunity Funds: Gain may be completely excluded from taxable income if held for at least 10 years on a post-2026 investment, subject to applicable requirements

At the time of publication, these rules are based on current law and IRS guidance. Future legislative or regulatory changes could impact these benefits. This is general information and not tax or legal advice.

Where This May Be Relevant

A QOF is often evaluated when:

  • Large capital gains have already occurred
  • A client is in a post-liquidity planning phase
  • Timing creates a need to address tax exposure
  • Reinvestment is already being considered

This is not a universal strategy—it depends on timing, eligibility and overall planning.

How This Fits Into a Broader Plan

A QOF is both:

  • A tax consideration, and
  • An investment decision

It must be evaluated alongside:

Liquidity needs

Investment time horizon

Risk tolerance

Overall tax position

Important Considerations

  • Timing is critical — strict reinvestment deadlines apply
  • Long-term holding may be required to realize certain potential benefits
  • Investment risk remains — this is still a private investment

Because these factors vary, QOFs are generally evaluated alongside an investor’s CPA, legal advisor, and financial professional before any decision is made.

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This material is for informational purposes only and is not tax, legal, accounting, or investment advice. Investors should consult their own tax, legal, and financial advisors regarding their specific circumstances. Private investments involve risk, including possible loss of principal, illiquidity, limited transferability, and lack of a guaranteed secondary market. Suitability depends on each investor’s objectives, risk tolerance, liquidity needs, tax circumstances, and applicable offering requirements.

Disclaimer

Unless indicated otherwise all securities offerings are made through Global Pacific Securities US, Inc., a broker-dealer registered with the SEC and Member of FINRA and SIPC. This communication is for informational purposes only, is not an offer, solicitation, recommendation or commitment for any transaction or to buy or sell any security or other financial product, and is not intended as legal, investment or tax advice or as a confirmation of any transaction. Prospective investors should inform themselves and seek their own independent legal, tax, financial or any other advice and take the appropriate advice as to any applicable legal requirements and applicable taxation and exchange control regulations in the countries of their citizenship, residence or domicile before engaging in any investing activity. For risks of private placements, please read the Important Information. Client examples are hypothetical and for illustration purposes only. Individual results may vary. Key Considerations: (1) Please refer to the Private Placement Memorandum (PPM) of the specific investment. (2) Investors should be aware that income distribution is not guaranteed and is subject to change based on various factors including market conditions, and cash availability. Please refer to PPM of the specific investment. (3) The rates are different for each investment and should not be construed as a guarantee as the actual distribution rate may vary based on the performance of the investment. (4) The minimum investment amounts are hypothetical and may vary based on specific investment opportunities.