Deferring Taxes Through a 1031 Exchange vs. Qualified Opportunity Funds

Section 1031 of the Internal Revenue Code, as amended by the Tax Cuts and Jobs Act (“TCJA”) in December 2017, now allows for the deferral of tax arising from gains solely on the sale of real property. This limitation to real property was a significant change from rules that applied prior to 2018. On the other hand, Qualified Opportunity Funds, a product of the TCJA, allow for the deferral of tax due on capital gains from any source that generates eligible gains.

Although further regulations are needed to fully implement Qualified Opportunity Funds, taxpayers who have recently recognized capital gains, or plan to do so imminently, need to carefully analyze the requirements, benefits, and limitations of both Section 1031 like-kind exchanges and Qualified Opportunity Funds. Please fill out the below form to view tables that provide a comparison of the various attributes of each alternative.