What Is Qualified Opportunity Fund?
A Qualified Opportunity Fund is an investment vehicle that channels capital gains into designated Opportunity Zones in exchange for federal capital gains tax deferral and, if held long enough, potential exclusion of gains on the new investment.
Why it matters
Unlike a 1031 exchange, it only requires reinvesting the capital gain (not the full sale proceeds) and doesn't require another piece of real estate to complete the exchange.
1031 Exchange vs. DST vs. Qualified Opportunity Fund
Defers capital gains tax by reinvesting the full sale proceeds into another "like-kind" property, with strict identification and closing deadlines.
A fractional-ownership structure that still qualifies as like-kind real estate for a 1031 exchange, letting an investor exit active management while keeping the tax deferral.
Defers (and can partially exclude) capital gains tax by reinvesting just the gain — not the full proceeds — into a designated Opportunity Zone fund; no replacement real estate required.
Related Terms
More Investing Terms
This definition is provided for general educational purposes and is not financial, legal, tax, or real estate advice. Verify important decisions with appropriately qualified professionals.
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