Opportunity Zone Fund Investment vs. 1031 Exchange

In my opinion the opportunity zone fund investment (OZ) is a superior method to defer taxes on capital gains for the following reasons:

1. Deferral of taxes via OZ lasts until 12/31/26.
2. 15% of gain is completely eliminated if the OZ investment is held for 7 years. The 1031 exchange has no similar provision.
3. In a 1031 exchange it has to be like kind real property. There is no like kind property requirement in an OZ as it can be real or personal or even a business.
4. There is no requirement to identify replacement property in 45 days in an OZ.
5. There is no need for a financial intermediary to handle the proceeds from a sale of property in an OZ like there is in a 1031 exchange.
6. In a 1031 exchange you have to reinvest the entire proceeds from the sale to avoid taxes. In an OZ, you only have to reinvest the gain within 180 days of the sale.
7. If you hold the OZ for 10 years, then none of the gain of the sale of the OZ is taxable.