Opportunity Zones (OZs) are federally-designated geographic areas where investments through Qualified Opportunity Funds receive tax benefits — capital gains deferral and (for long holds) partial exclusion.
Created under the 2017 Tax Cuts and Jobs Act. Investors can defer capital gains by rolling them into Qualified Opportunity Funds investing in OZ property. Holds of 10+ years eliminate tax on OZ-specific appreciation. Specific compliance requirements apply.
LA has dozens of designated Opportunity Zones, particularly in South LA, parts of Hollywood, and certain Valley submarkets. For LA multifamily sellers, OZ investments can be a 1031 alternative — particularly for sellers who don't need like-kind replacement but want tax deferral on gains.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
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