Unlike a 1031 exchange, an Opportunity Zone investment can defer gain from any source — not just real estate — and adds a second benefit: tax-free growth on the new investment itself if held long enough.
How it works
A capital gain invested in a Qualified Opportunity Fund within 180 days gets its tax deferred. Separately, if the QOF investment itself is held at least 10 years, its basis is stepped up to fair market value at sale — eliminating tax on the QOF investment’s own appreciation, though the originally deferred gain still eventually comes due.
What this does not include
This doesn’t track the statutory deadline by which deferred gain becomes taxable regardless of whether the QOF interest has been sold — a specific date this calculator’s mechanics-only computation doesn’t check against.
How to use this calculator
- Enter the original gain and days taken to invest it in the QOF.
- Enter the QOF investment’s value at eventual sale and years held.
Frequently asked questions
Is the original gain ever forgiven?
No — it’s deferred, not excluded; the original gain amount eventually becomes taxable. The tax-free treatment applies specifically to the QOF investment’s own appreciation after the 10-year hold.
What happens if I sell before 10 years?
The QOF investment’s appreciation becomes fully taxable, losing the basis step-up benefit — only the original deferred gain and the appreciation treatment change; nothing is retroactively penalized.
What counts as a Qualified Opportunity Fund?
A specific investment vehicle organized to invest in property or businesses located in designated low-income Opportunity Zones — not just any investment in an underserved area.
