Opportunity Zone Fund vs. Section 1031

If you own some real estate that has appreciated in value, what should you do if you don't want to pay the income tax on the gain when you sell. You could defer the tax if you did a section 1031 exchange by buying like kind property with the gross proceeds from the sale. Well now you have another tool to use, the opportunity zone fund investment, which I feel is a better way to go with one exception that I will discuss later. The opportunity zone is a low income area in each state where investment is encouraged by tax advantages. The tax advantages include: deferral of tax until 2027, a 10% reduction of tax if the investment is held 5 years, a 15% reduction of tax if the investment is held 7 years, and no tax on the appreciation of the opportunity zone fund investment if held 10 years. One very big difference between the section 1031 and opportunity zones is that with opportunity zones you only have to invest the capital gain portion not the gross proceeds. The only time I would favor a 1031 section exchange would be if your intent is to hold the replacement property until death where it would get a step up in basis to fair market value.