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There is a frenzy around opportunity zone investments and the capital gains tax benefits that come with them, but for commercial real estate investors and developers, 1031 exchanges will likely provide better tax benefits. That is because there are mitigating circumstances to receiving the tax benefit from the qualified opportunity zone. Bryan Shaffer, principal and managing director of George Smith Partners, has outlined five reasons why the tax benefits of opportunity zone investments might not be as advantageous as expected.

First, Shaffer says that the capital gain must be reinvested, and he calls this the most “misunderstood” aspect of the qualified opportunity zone feature. “The most misunderstood part of qualified opportunity zone investments is that you only receive the tax benefits if the investment comes from a capital gain that is reinvested. New money receives no tax benefits,” Shaffer tells GlobeSt.com.

Kelsi Maree Borland

Kelsi Borland is a freelance writer and editor living whose work has appeared in such publications as Travel + Leisure, Angeleno and Riviera Orange County.

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