With the release of proposed regulations and a revenue ruling in late October 2018, the IRS has provided enough information for most individuals involved in real estate to be able to move forward to establish the QOF (and possibly the first-tier entity that will own and operate the QOZ Businesses) to invest in real estate or to select a QOF in which to invest.
This is particularly true for real estate developers who plan to invest their capital gains in specific real estate projects. To benefit from the maximum 15% reduction in capital gains tax due on funds placed in a QOF, it is necessary that the fund be set up by December 31, 2019, which may cause the best properties to be tied up quickly. Potential investors should begin to consider the timing of possible sales and investment through a QOF, so capital gains may be devoted to new real estate investments under the QOZ program.
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