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  • Writer's pictureHoward Kline


Opportunity Zones are the most exciting investment vehicle that I have seen in my 43 years as a real estate professional. In this video, In this video I explain who should be thinking about Opportunity Zones, why and what you need to know. This is for people who are concerned about their capital gains taxes.

If you prefer to listen to or download the, audio only, podcast, click below this paragraph.

This post is only intended to give you, just enough information to know if you should be thinking about Opportunity Zones. I will be publishing more articles, videos and podcasts in the future, on the topic, so stay tuned. If you want to read some of my previous articles, click on the following links:

Fundrise also gives a brief explanation of what Opportunity Zones are.

You can watch the video here (above), listen to the, audio only, podcast, (below),will be posted shortly, download the podcast or read the article, also in this post.


The first thing I would like to get across is, don’t believe all of the hype about ozones. Most of what I have been seeing, hearing and reading is about how great Opportunity Zone investments are. In fact, they can be.Yes, Opportunity Zone investments offer incredible tax advantages if and only if the initial investment is a good investment.The tax benefits are merely icing on the cake


Second, this isn’t easy material.


Even as an attorney for nearly 43 years I have found it complicated with limited guidance from the government. Most of my energy has gone into considering the best strategies for implementing Opportunity Zone investments. The strategies, in most instances will have to be constructed on a case-by-case basis. It’s not just about knowing the law, it’s about understanding it and knowing how, best, to apply it.

I have reviewed and analyzed the law and regulations of approximately 250 pages, twice. I have also read countless articles, white papers and attended numerous webinars and seminars.

I’ve considered the law and regulations within the context of other tax, real estate, corporate and business laws, and applied sound business judgment and experience.

From November 2018 through August 5, 2019, I have spent over 200 hours of research and analysis, contemplating various plans and ways to implement an effective Opportunity Zone investment.  I anticipate that over the next year, I will be spending over 1,500 hours dedicated to Opportunity Zones.

If you want to become an expert on Opportunity Zones, then you are more than welcome to spend as much time as I am. On the other-hand, if you want to know when you should be thinking about it so you or your clients can take advantage, then stay with me.


Let’s now consider this question:

Are their Opportunity Zone experts?

The answer to that question is yes, if your definition of an expert is someone that knows more than you on particular topic.

Do I consider myself an expert? My answer is yes, based upon the definition referenced, above. I have already spent much more time than others on the topic and, well, my legal background does prepare me for this deep dive. But let me add, we are all in the process of learning about this is brand new material. Anyone who intends to be an expert, will need to focus on opportunity zones and dedicate a great deal of time and attention to the topic.

Let me add that because someone is an accountant, a real estate, agent, attorney or financial advisor, doesn’t mean that they have the requisite knowledge to advise you on Opportunity Zones.


The law was passed as part of The Tax Cuts and Jobs Act of 2017. The law became effective on January 1, 2018.

The Internal Revenue Service came out with its first round of regulations and guidance in October 2018, nearly 10-months later. This first set of regulations and guidance tended to raise more questions than answers

IRS, then published its second round of regulations and guidance in mid April 2019. Before this second round, I thought that anyone willing to invest in an Opportunity Zone project was out of their mind. There was, just too much unknown and risk.The April 2019 regulations, however provided enough guidance to begin considering Opportunity Zone investments.


On whose radar should it be?

  • Anyone who has recently sold investment assets and has recognized capital gains. In a separate post, I will explain what capital gains are. Investment sales may include the sale of real property, equipment, a business, stocks, bonds or any other asset the sale of which might subject the seller to federal capital gains taxes.

  • Anyone who knows or advises someone who has recently sold investment assets who has recognized capital gains. This may include:

    • Real estate agents

    • Developers

    • Attorneys

    • Accountants

    • Financial advisors;

  • Businesses that are looking for significant tax benefits that may include:

    • Equipment rental company;

    • A Restaurant;

    • An Insurance company;

    • A Franchise; or

    • A doctor or dentist office, to name a few.

  • Anyone who currently owns property, real or personal or a business that is situated in an Opportunity Zone

Warning: There are certain limitations for assets located in Opportunity Zones that were acquired before January 1, 2018 With this being said there are some strategies that can be effective in certain circumstances, some of which we will be discussing in future posts.

And finally, anyone who is or will consider a 1031 exchange



Now let’s talk about the relationship to 1031 exchanges

The reason why I am doing this comparison, is that, from a tax perspective, there are similarities between a 1031 exchange and Opportunity Zones. Both should be considered by investors who have realized capital gains and are looking for ways to minimize their taxes or defer their tax payments.  For both types of investments, the significant driver is tax.

1031 exchanges are those who have recognized capital gains and are looking to defer their taxes on those gains.

A deferment of taxes does not forgive or excuse the tax, it just delays the obligation to pay the tax on the gain until sometime in the future, usually when the new asset or property is sold. A 1031 deferment is not limited by time. You don’t have to sell the new property by a certain time. On the other-hand, the tax deferment provisions relating to Opportunity Zones is limited in terms of duration. An Opportunity Zone investment also allows the investor to defer the tax on their capital gains, but only through the 2026 tax year.

It’s important to note that there are other differences between an Opportunity Zone investment and a 1031 Exchange. For some of those differences read: Caution ~ Opportunity Zones Ahead


So, what’s the big deal about Opportunity Zones?

If the investor holds onto the Opportunity Zone investment for 10-years*, they do not pay any capital gains tax on the increase in value. What do I mean by this?



Assume that on January 1, 2012 you purchased a 4-plex for $100,000. On August 31, 2019, you sold it for $1,000,000. In this example, you realized a capital gain of $900,000. If you didn’t reinvest this money into a 1031 Exchange property or an Opportunity Zone property, you would incur taxes on that gain.

Consider a reinvestment in a 1031 Exchange Property.

If you reinvested it into a new property that I will call 1031 Property #2 you wouldn’t owe taxes on the capital gain of $900,000 until you sold 1031 property #2. Of course, when you sold 1031 Property #2, you could continue the tax deferral by reinvesting any additional gains along with the original $900,000 gain, in other 1031 exchange properties, and on and on and on.


Let’s now take that same $900,000 gain and invest it in an Opportunity Zone asset that I will call oZone Property #1. “oZone” is my nickname for Opportunity Zone.

This is where the 1031 rules and Opportunity Zone rules differ. If you invest your $900,000 gain in an Opportunity Zone asset, capital gains taxes will be owed on the $900,000 the sooner of the tax year that oZone Property #1 was or April 15, 2027. It is not an unlimited deferral in terms of time. IRS has provided some guidance on ways to limit these deferral limitations and there are some other strategies that can be used to further limit the negative tax consequences. I will be discussing these in future posts.

Now comes the proverbial “pot at the end of the rainbow”. Assume that you hold oZone Property #1 for 10 years and you then sell it for $10,000,000. Upon sale, you would realize a capital gain of $9,100,000. But, because you held it for 10 years, none of that gain would be subject to federal taxes, assuming that you fully complied with the law and other tax factors. There is no need for further deferral as there would be in a 1031 exchange. You can make a lot of money based upon the increase in equity and avoid any taxes on the gain.

This post is not intended to sell you on the idea of investing in Opportunity Zone assets or businesses. My goal in this post is to simply alert you to consider this as an investment opportunity for either you or your clients. These investments have some huge benefits.


However, it has some real gotchas and pitfalls.


First – it’s complicated


Second – to get into it, you will need………… not an expert, but likely a team of experts, including lawyers, accountants and real estate or business professionals who are knowledgeable on the topic of Opportunity Zones.  This may be more difficult than you might think, since the material is so new and it takes time and focus to consider the ramifications. The devil is in the details. You need people who know this material, not just, know of it. Don’t try to do this on your own.


Third – For the most part, an Opportunity Zone investment has to remain in compliance with the law, for 10-years. That’s a long time; and

In later podcasts, I will be explaining many of the details and some strategies that I and others are considering, so remember to subscribe to our newsletters.


Let’s summarize what I’ve discussed in this post:

  1. If you or someone you know recently sold investment property and is looking to reinvest their gains, consider an Opportunity Zone investment. It should be on your radar;

  2. An Opportunity Zone investment must first be a good to great investment. The tax benefits are icing on the cake. Don’t be sold on the hype.

  3. Don’t try to do this on your own. Bring in a professional or a team of professionals who have focused on Opportunity Zones and who are knowledgeable on the topic

If you want to know more about me or Opportunity Zones send me an email at or call me at 702.706.4433,

*There are some other tax benefits including a step-up in basis of 10% if you hold for 5-years and 15% if you hold for 7-years.

The author:

Howard F. Kline is a Nevada licensed real estate advisor with SVN The Equity Group, located in Las Vegas Nevada. He has also been a licensed California attorney for over 42 years, primarily focused on commercial real estate and has been a licensed California broker and a licensed New York real estate agent. He is also the founder and host of CRE Radio & TV, an online commercial real estate magazine since 2010 and recently founded the Las Vegas Business Journal, an online, media rich, interactive business magazine. For more information, contact Howard at 702.706.4433 or at


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