While the initial deferral of capital gains is an attractive feature of the QOZ program, the true power lies in the long-term hold. The legislation stipulates that if an investment in a QOZ fund is held for at least ten years, the investor can elect to adjust the basis of the investment to its fair market value on the date it is sold.
This means that all federal capital gains tax on the appreciation of the QOZ investment itself is permanently eliminated.
This benefit is unparalleled in the current tax code. When you combine this with the potential to also eliminate depreciation recapture tax, the QOZ structure offers one of the most effective ways to build and preserve wealth on an after-tax basis.
At SF QOZ Fund, our entire investment thesis is built around this 10-year horizon. We are not seeking short-term flips; we are acquiring and developing core assets in high-growth Miami submarkets with the explicit goal of maximizing value over a decade, allowing our investors to reap the full rewards of tax-free growth.