Opportunity Zone Investing/Non-U.S. Investors – Defer U.S. Capital Gains Tax on USRPI

Non-U.S. investors should be aware of the tax benefits of investing in “Opportunity Zones.

Opportunity Funds were created under the Tax Cuts and Job Acts of 2017 to incentivize investments in specified areas in the United States.

(Opportunity Funds are an investment vehicle organized as a corporation or a partnership for the purpose of investing in qualified opportunity zone property and provided that the Fund holds at least 90% of its assets in qualified opportunity zone property.)

An investment in an Opportunity Fund permits deferral of taxes due on capital gains if the gain is rolled over/reinvested into a qualified Opportunity Zone investment within 180 days; in addition, such investment permits exclusion of gain on a sale of an investment in a qualified Opportunity Zone investment.

The gain deferral is unavailable with respect to any sale or exchange made after Dec. 31, 2026, and the exclusion of capital gain recognition on the sale or exchange of an investment in the qualified opportunity fund is not available for investments in qualified opportunity zones made after Dec. 31, 2026.

Transaction Examples

To further illustrate they types of transactions that can qualify for Opportunity Zone tax benefits, some recent examples in which our firm has recently become involved include:

  1. Development – Acquisition, Financing, Fund Raising and Leasing of an estimated $100 million development transaction.
  2. Creation of a Fund to purchase and develop a hotel and multi-family mixed use project.
  3. Apply funds from sale of previous business to reuse property to build possibly a bar and restaurant or a brewery, distillery and flea market.

If you believe you or your clients may have or will be receiving capital gains in the U.S. on any transaction and are interested in the possibility of deferring the U.S. tax on such gains through the Opportunity Zone program, please contact Miriam O. Hyman, Andrew L. Odell or Rodrigo Sadi.