Comparison of 1031 Exchange & Opportunity Zone Incentives

Many investors have inquired about the primary differences between a 1031 exchange and an Opportunity Zone investment. We’ve added a table below comparing various aspects:

Comparison of Tax Deferred Real Estate Investment Structures


Comparison 1031 Exchange Opportunity Zone
Use of Property Must be like-kind Does not need to be like-kind
Nature of Property Must be real estate Can be real estate, business property or operating business.
Identification of Reinvestment 45 days 180 days
Closing on Reinvestment 180 days 180 days
Proceeds to invest Entire proceeds from sale Only the gain on the sale
Partnership Interests Not allowed Allowed
Stock in Corporations Not allowed Allowed
Recognition of Deferred Gain Upon sale of replacement property unless further deferred to new like-kind property “Recognition Date”- earlier of sale of investment in QO Fund, or December 31, 2026
Tax Basis Step-Up None 10% if 5-year hold. 15% if 7-year hold.