Are there certain asset classes that are more beneficial to invest in Opportunity Zones?
1031 exchanges are only utilized when there is "like-kind" exchange of real property and do not enable for the exclusion of built-in appreciation on the assets. Virtually all classes of assets are eligible for OZ investments. Multifamily and industrial assets have seen the most activity to date.
They are different animals. 1031 is limited only to real estate; Opportunity Zones can get benefits for capital gain from the sale of any asset to an unrelated person. OZs generally require development and 1031 allows you to buy turnkey property. There are other major nuanced differences, and you should consult with your tax advisor to find out how it affects your individual situation.
In an Opportunity Zone, you only rollover the gain, not 100% of the sale proceeds. You get a reduction in taxes and deferral until 2026. And if you stay in the investment for 10 years, you pay no tax on the gain from the OZ investment. I prefer real estate OZ deals. I like hard assets.
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