--- title: Can a Qualified Opportunity Fund Invest in a REIT? description: Qualified Opportunity Funds (QOFs) are the vehicles that investors can use to participate in the Opportunity Zone program, which was created by the 2017 Tax Cuts and Jobs Act (TCJA). Read this article to learn if QOFs can invest in REITs. image: https://www.realized1031.com/hubfs/reitiStock-1250153439.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # Can a Qualified Opportunity Fund Invest in a REIT? Posted Sep 8, 2021 ![reitiStock-1250153439](https://www.realized1031.com/hs-fs/hubfs/reitiStock-1250153439.jpg?width=750&height=392&name=reitiStock-1250153439.jpg) Qualified Opportunity Funds (QOFs) are the vehicles that investors can use to participate in the Opportunity Zone program, which was created by the 2017 Tax Cuts and Jobs Act (TCJA). [Opportunity Zones](https://www.realized1031.com/opportunity-zones) are federally designated areas in need of economic growth and investment. In exchange for directing investments in the targeted regions, taxpayers can defer and reduce their taxes on invested funds under certain circumstances. Here is how the program works: -   Investors who have capital gains from sources such as the sale of stock, real property, or other assets that they obtain before January 1, 2027, can direct those gains into a qualified opportunity fund (within 180 days of realizing the increase). -   By doing so, the investor can defer the payment of taxes due on the gain until the investment is sold (or otherwise experiences an inclusive event) or until December 31, 2026 (whichever is first). - If the investor keeps the funds in the QOF for five years or more, the basis will be increased by 10% of the deferred gain. If the investor holds the QOF investment for seven years, the increase in the basis will be 15%. Maintaining the QOF investment for ten or more years will provide the taxpayer with the benefit of both the 15% increase in basis on the gain and will relieve the taxpayer of capital gains due on appreciation (if any) on the QOF investment. To be eligible for deferral, taxpayers must file Forms 8949 and 8997. ### What Is a QOF? The TCJA established rules governing [Qualified Opportunity Funds](https://www.realized1031.com/blog/qualified-opportunity-funds-vs.-qualified-opportunity-zone-businesses#sts=The%20QOF%20--Funding%20the%20Businesses) as well. It must be set up as a corporation (LLC or C corporation is acceptable) or partnership to invest in QOZs. The QOF must file a [Form 8996](https://www.irs.gov/forms-pubs/about-form-8996) annually and invest more than 90% of its assets in a designated opportunity zone. Those investments can include property, equipment, and businesses, and at least 50% of the gross income must result from activities within the opportunity zone. In addition, from a practical standpoint, a QOF must satisfy the "original use" or "substantial improvement" test that is part of the opportunity zone requirements. The requirements include: -       The QOF must have acquired the property within the QOZ from an unrelated party after December 31, 2017. -       Either the original use of the property starts in the QOZ by the QOF, or the QOF must substantially improve the property. -       At least 70% of the use of the property by the QOF must be in the QOZ during the holding period. ### What Kinds of Investments Are Typical? Development of residential and commercial properties are common activities in QOZs, including rehabilitation of damaged homes for rental use and improvement of office and retail properties. Environmental and energy projects are also frequent, including clean energy and alternative farming enterprises. While a [REIT](https://www.realized1031.com/glossary/real-estate-investment-trust-reit) (Real Estate Investment Trust) can invest in a Qualified Opportunity Fund, just as other corporations and individuals can, the obverse is not available in that a REIT is not an eligible destination for the targeted investment of a QOF. This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. Download The Guide To Opportunity Zones [![Download The Guidebook to QOZ's](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/QOZ-eBook-250.png?width=250&height=250&name=QOZ-eBook-250.png "Learn More About Qualified ...") ](https://www.realized1031.com/blog/can-a-qualified-opportunity-fund-invest-in-a-reit#blogform) Download eBook ---   --- ### Download The Guidebook to QOZ's ![Download The Guide To Opportunity Zones](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/QOZ-eBook-550.jpg?width=550&height=650&name=QOZ-eBook-550.jpg) Learn More About Qualified Opportunity Zones Investments. By providing your email and phone number, you are opting to receive communications from Realized. If you receive a text message and choose to stop receiving further messages, reply STOP to immediately unsubscribe. Msg & Data rates may apply. To manage receiving emails from Realized visit the Manage Preferences link in any email received. Search ### [Why Realized](https://www.realized1031.com/why-realized) - [Wealth Management](https://www.realized1031.com/the-wealth-management-gap) - [Why Realized](https://www.realized1031.com/why-realized) - [Our Process](https://www.realized1031.com/how-realized-works) - [Scenarios](https://www.realized1031.com/scenarios) - [Private Client Program](https://www.realized1031.com/private-client) - [Realized Exchange Services](https://www.realized1031.com/realized-exchange-services) ### [The Company](https://www.realized1031.com/about-us) - [The Team](https://www.realized1031.com/about-us) - [FAQ](https://www.realized1031.com/frequently-asked-questions) - [Testimonials](https://www.realized1031.com/testimonials) - [Press](https://www.realized1031.com/press) - [Careers](https://www.realized1031.com/careers) ### [Partners](https://www.realized1031.com/partners) - [Financial Advisors](https://www.realized1031.com/advisor) - [Broker Dealers](https://www.realized1031.com/partners/broker-dealers) - [Real Estate Agents](https://www.realized1031.com/partners/real-estate-agents) - [Certified Public Accountants](https://www.realized1031.com/partners/certified-public-accountants) ### [Resources](https://www.realized1031.com/resources) - #### Learn - [Articles](https://www.realized1031.com/blog) - [Glossary of Terms](https://www.realized1031.com/glossary) - [Capital Gains Tax Rates](https://www.realized1031.com/capital-gains-tax-rate) - #### Watch - [Video Library](https://www.realized1031.com/videos) - [Webinar Archive](https://www.realized1031.com/webinars) - #### Read - [Delaware Statutory Trust](https://www.realized1031.com/delaware-statutory-trust) - [Tenants-In-Common](https://www.realized1031.com/tenants-in-common-tic) - [1031 Exchange](https://www.realized1031.com/1031-exchange) - [Qualified Intermediary](https://www.realized1031.com/qualified-intermediary) - [Qualified Opportunity Zones](https://www.realized1031.com/opportunity-zones) #### Realized - 500 W 13th Street Austin, TX 78701 - (877) 797-1031 ##### [Contact Us](https://www.realized1031.com/contact-us) - [![Realized on Facebook](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-facebook-whiterev.png?width=60&height=60&name=social-facebook-whiterev.png)](https://www.facebook.com/Realized/) - [![Realized on LinkedIn](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-linkedin-whiterev.png?width=60&height=60&name=social-linkedin-whiterev.png)](https://www.linkedin.com/company/realized/) - [![Realized on YouTube](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-youtube-whiterev.png?width=60&height=60&name=social-youtube-whiterev.png)](https://www.youtube.com/c/Realized1031?sub_confirmation=1) - [![Realized Holdings, Inc. BBB Business Review](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/bbb/RZH2-bbb-seal.png?width=40&height=65&name=RZH2-bbb-seal.png)](http://www.bbb.org/central-texas/business-reviews/real-estate-investors/realized-holdings-llc-in-austin-tx-1000112948/#bbbonlineclick) - [![FEA Logo](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/fea/RZH2-fea-logo.png?width=82&height=65&name=RZH2-fea-logo.png "FEA Logo")](https://www.1031.org) SECURITIES DISCLOSURE Realized1031.com is a website operated by Realized Technologies, LLC, a wholly owned subsidiary of Realized Holdings, Inc. (“Realized Holdings”). Securities and/or Investment Advisory Services may be offered through Registered Representatives or Investment Advisor Representatives of Realized Financial, Inc. ("Realized"), a broker/dealer, member [FINRA](https://www.finra.org)/[SIPC](https://www.sipc.org/), and registered investment adviser. Realized is a subsidiary of Realized Holdings, Inc. ("Realized Holdings"). Check the background of this firm on [FINRA's BrokerCheck](https://brokercheck.finra.org/firm/summary/22333). Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment. Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested. This site is published for residents of the United States who are accredited investors only. Registered Representatives and Investment Advisor Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of services referenced on this site are available in every state and through every representative listed. For additional information, please contact the Realized Compliance department at 512-472-7171 or info@realized1031.com. - [Terms & Conditions](https://www.realized1031.com/terms-and-conditions) - [Privacy Policy](https://www.realized1031.com/privacy-policy) - [Form CRS](https://www.realized1031.com/hubfs/common-files/disclosures/FormCRS.pdf) - [ADV 2A](https://www.realized1031.com/hubfs/common-files/disclosures/ADV2A.pdf) - [Reg BI Disclosures](https://www.realized1031.com/hubfs/common-files/disclosures/RegBI.pdf) -   © 2026 Realized Holdings, Inc. ```json { "@context" : "http://schema.org/", "@type" : "BlogPosting", "articleBody" : "Qualified Opportunity Funds (QOFs) are the vehicles that investors can use to participate in the Opportunity Zone program, which was created by the 2017 Tax Cuts and Jobs Act (TCJA). Opportunity Zones are federally designated areas in need of economic growth and investment. In exchange for directing investments in the targeted regions, taxpayers can defer and reduce their taxes on invested funds under certain circumstances. Here is how the program works: Investors who have capital gains from sources such as the sale of stock, real property, or other assets that they obtain before January 1, 2027, can direct those gains into a qualified opportunity fund (within 180 days of realizing the increase). By doing so, the investor can defer the payment of taxes due on the gain until the investment is sold (or otherwise experiences an inclusive event) or until December 31, 2026 (whichever is first). If the investor keeps the funds in the QOF for five years or more, the basis will be increased by 10% of the deferred gain. If the investor holds the QOF investment for seven years, the increase in the basis will be 15%. Maintaining the QOF investment for ten or more years will provide the taxpayer with the benefit of both the 15% increase in basis on the gain and will relieve the taxpayer of capital gains due on appreciation (if any) on the QOF investment. To be eligible for deferral, taxpayers must file Forms 8949 and 8997. What Is a QOF? The TCJA established rules governing Qualified Opportunity Funds as well. It must be set up as a corporation (LLC or C corporation is acceptable) or partnership to invest in QOZs. The QOF must file a Form 8996 annually and invest more than 90% of its assets in a designated opportunity zone. Those investments can include property, equipment, and businesses, and at least 50% of the gross income must result from activities within the opportunity zone. In addition, from a practical standpoint, a QOF must satisfy the \"original use\" or \"substantial improvement\" test that is part of the opportunity zone requirements. The requirements include: The QOF must have acquired the property within the QOZ from an unrelated party after December 31, 2017. Either the original use of the property starts in the QOZ by the QOF, or the QOF must substantially improve the property. At least 70% of the use of the property by the QOF must be in the QOZ during the holding period. What Kinds of Investments Are Typical? Development of residential and commercial properties are common activities in QOZs, including rehabilitation of damaged homes for rental use and improvement of office and retail properties. Environmental and energy projects are also frequent, including clean energy and alternative farming enterprises. While a REIT (Real Estate Investment Trust) can invest in a Qualified Opportunity Fund, just as other corporations and individuals can, the obverse is not available in that a REIT is not an eligible destination for the targeted investment of a QOF. This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.", "articleSection" : [ "Qualified Opportunity Zones" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2022-04-15T17:57:30+0000", "datePublished" : "2022-04-15T17:57:30+0000", "description" : "Qualified Opportunity Funds (QOFs) are the vehicles that investors can use to participate in the Opportunity Zone program, which was created by the 2017 Tax Cuts and Jobs Act (TCJA). Read this article to learn if QOFs can invest in REITs. ", "headline" : "Can a Qualified Opportunity Fund Invest in a REIT?", "image" : { "@type" : "ImageObject", "height" : 399, "url" : "https://f.hubspotusercontent10.net/hubfs/733513/reitiStock-1250153439.jpg", "width" : 750 }, "mainEntityOfPage" : "https://www.realized1031.com/blog/can-a-qualified-opportunity-fund-invest-in-a-reit", "name" : "Can a Qualified Opportunity Fund Invest in a REIT?", "publisher" : { "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "USA", "addressLocality" : "Austin", "addressRegion" : "TX", "postalCode" : "78701", "streetAddress" : "500 W 13th Street " }, "logo" : { "@type" : "ImageObject", "height" : 60, "url" : "http://www.realized1031.com/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black-No-Margin-296x60-AMP.png", "width" : 296 }, "name" : "Realized" }, "thumbnailUrl" : "https://f.hubspotusercontent10.net/hubfs/733513/reitiStock-1250153439.jpg" } ```