Commercial development project in an opportunity zone
I'm considering doing a real estate project on land that is in an opportunity zone.  My understanding of the opportunity zone rules is that I can sell appreciated assets to fund the project and defer the capital gains on these assets until 2026.

Is there anything I can do in my real estate project to offset the tax on these gains before they come due in 2026, or will I just end up paying them when the deferral ends?
[{"id": "iipvsuz", "text": "There\u2019s more to it, but in essence you can reduce or eliminate the liability on the capital gains entirely by holding the real estate for 10 years. The tax liability burns down iteratively in years 5, 7, or 10. \n\nThe gains also have to be invested through a qualified fund. I\u2019d recommend speaking to an intermediary or attorney for further specifics.", "replies": [{"id": "iitcpac", "text": "This.\n\nAlso there is a time limit to get your actualized gains into the qualified fund. I think its 180 days. I would look it up. its been a while since I researched all of this.\n\nOP, what are you planning on building? Are there any improvements on the land already?\n\nFrom what I can remember if you buy an existing building, you need to improve or renovate the building to 100% of the improvement's value in order to qualify.(ie land valued at 300k, improvement valued at 1m, you need to put in 1m into the project) Except if the building was abandoned for over two years. I don't remember seeing anything specifying how much capital you need to deploy on land. I think any improvement of land would qualify so long as the end use is one of the approved end uses (ie, no 420 uses, alcohol uses, etc. )\n\n&amp;#x200B;\n\nThat's what I remember, but its been years since I looked into this so I could be wrong.", "replies": [{"id": "iituwjo", "text": "I've owned the land for a decade (way before the 2017 legislation was enacted).  There are currently three low value buildings on it that will get taken down at some point during development.  I'm still working on what exactly I will build, but I intend to hold the resulting development long term and lease it out.\n\nReading further on the 5, 7, 10 year periods there appear to be two different things going on.  The 5 and 7 year periods allow a 10% and 15% step up in the basis on the capital gains that were invested in the QOF (qualified opportunity fund), but the periods end in 2026 so there is no longer enough time left in the program to get these.\n\nThe 10 year holding period increases the basis on the QOF investment to 100% of value at sale.  This does not expire with the program, and would be good for me since I plan to hold long term.\n\nI need to figure out the details of the QOF.  It needs to be a partnership (and taxed that way).  It looks like I could transfer my land into an opportunity zone business and then form a QOF to develop the land.  I'm still wading through the details.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ij5jhl3", "text": "Are you in cali?", "replies": [{"id": "ij5u3bn", "text": "No.  I've read that California (and a few other states that do not conform to the IRS code) can introduce state tax expenses that one does not have in states that conform.", "replies": [], "depth": 2}], "depth": 1}]