What is the Minimum Investment In a Qualified Opportunity Zone Fund?

Posted Jun 15, 2023


Qualified Opportunity Zones (QOZs) were established in 2017 to encourage investments in distressed or low-income areas by offering potential tax benefits to investors. A Qualified Opportunity Zone Fund is organized for investing in QOZ properties

There are currently no minimum or maximum investments required by Opportunity Zone legislation. Instead, investment requirements are set by each individual fund. 

What is a Qualified Opportunity Zone (QOZ)?

QOZs are areas identified by the government as needing economic development. To encourage new investments and revitalization of targeted areas, investors can potentially defer or reduce capital gains taxes on investments made in these locations. 

Opportunity Zones are designated low-income communities that meet certain criteria and have been nominated by state governors and certified by the U.S. Department of the Treasury. These zones can be found in all 50 states, the District of Columbia, and U.S. territories. They typically include areas that have experienced persistent poverty or have lower-than-average income levels.

What is a Qualified Opportunity Zone Fund (QOZF)? 

QOZFs encourage investors to facilitate economic development by allowing multiple investors to pool their funds to make investments in QOZFs. Most of these funds are privately held. To become a fund, the eligible party self-states its status by submitting IRS Form 8996. 

To qualify as a QOZF the IRS requires the fund invests an amount equal to the amount paid by the fund to substantially improve the property within 30 months. 

What is the Minimum Investment in an QOZF? 

There is no specific minimum investment amount required by the IRS for investing in an QOZF. The amount is set by the fund's sponsor, and can vary based on the investment strategy of the fund. Many QOZFs have minimums over $100,000, with availability restricted to institutional investors or high-net-worth individuals. However, there are smaller QOZFs that have lower minimum investment amounts. 

Because the minimum investment requirement can vary widely from fund to fund, it's important to research and evaluate different funds to find one that aligns with your investment goals. 

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. It should also not be construed as advice meeting the particular investment needs of any investor.

Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation.

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