Opportunity Zone Funds vs. DSTs

Know the difference before you invest!

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Qualified Opportunity Fund vs. Delaware Statutory Trust

You’ve probably noticed that Opportunity Zones have become popular among both institutional and individual investors recently.
Here is a snapshot of the main differences and similarities between QOFs and DSTs when completing an exchange.

Qualified Opportunity Fund (QOF)
Delaware Statutory Trust (DST)
Fund Focus
Speculative growth oriented redevelopment.
Non-speculative / Monthly cash flow.
Deferral of Capital Gain Tax
Deferred gains taxed 12/31/2026 at a partial step-up.
May be deferred indefinitely.
Depreciation Recapture
The difference between your property's purchase price and adjusted basis is taxed.
May be deferred indefinitely.
Step-Up in Basis
10% basis step-up if QOF investment held for five-plus years; 15% basis step-up of held for seven years (note the 15% step-up requires the investment to be completed by 12/31/2019).
Asset basis is stepped up to fair market value at time of death.
Eligible Gains Sources / Capital Other Than Cash
Short- and long-term gains on sale of most assets including securities in non-offsetting transactions.
Investment properties or real property held for productive use in a business or trade.
Investment / Replacement Limitations
Opportunity Zones have specifically identified boundaries.
Funds must be invested in a QOF.
Proceeds must be invested in income producing "like-kind" property. No location limitations within the United States.
Fund Sponsor Experience
Varies greatly, many with no related experience.
Varies greatly, almost all have verifiable track records.
Fund Sponsor Regulation Requirements
Minimal requirements with an evolving IRS guidelines.
Highly settled IRS guidelines and known regulatory environment.
Blind Pool / Identified Properties
Blind Pool - (Capital deployment is flexible as long as 90% of assets remain in an Opportunity Zone.)
Property or portfolio of properties clearly identified in the DST.

This material does not constitute an offer to sell or a solicitation of an offer to buy any security. An offer can only be made by a prospectus that contains more complete information on risks, management fees and other expenses. This literature must be accompanied by, and read in conjunction with, a prospectus in order to fully understand all of the implications and risks of the offering of securities to which it relates. A copy of a prospectus must be made available to you in connection with any offering. Investors should read a prospectus carefully prior to investing. New York investors should be aware that this advertisement is not an offering. No offering is made in New York except by a prospectus filed with the Department of Law of the State of New York. The Attorney General of the State of New York has not passed on, or endorsed, the merits of any offering. Investments are not bank guaranteed, not FDIC insured and may lose value. Securities Offered Through Capulent, LLC Member FINRA, SIPC.


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