What are Opportunity Zones?

Opportunity Zones (OZs) are federally designated census tracts located in economically distressed communities. They were originally created under the 2017 Tax Cuts and Jobs Act to encourage long-term private investment in underserved areas by offering tax incentives to investors. More than 8,700 zones were initially designated across the U.S., Puerto Rico, and several U.S. territories.

With the passage of the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, the Opportunity Zone program has been made permanent and significantly modernized, including rolling 10 year redesignation of zones and also a rolling 5 year deferral mechanism.

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Opportunity Zones 101

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Why were Opportunity Zones created?

The Investing in Opportunity Act was established to bring financial investments to distressed communities through housing development and new businesses.

How do you invest in an Opportunity Zone?

Investments in Opportunity Zones must be made through an investment vehicle certified as a Qualified Opportunity Fund (QOF). QOFs can be either closely held, or more akin to traditional private equity investment funds.

What are the tax benefits of investing in an Opportunity Zone after 12/31/2026?

Taxes on capital gains invested within 180 days into a QOF are deferred until the earlier of when the investment is sold or 5 years from the investment date.

  • If an investment is held for 5 years then 10% of the gain is excluded permanently (30% for rural investments).
  • And if the investment is held for more than 10 years, appreciation on the initial investment can be tax free and there is no depreciation recapture.

It’s important to note that this is a federal tax provision. States and localities may not all follow the federal rule.

What are the tax benefits of investing in an Opportunity Zone before 1/1/2027?

Taxes on capital gains invested within 180 days into a QOF are deferred until the earlier of when the investment is sold or December 31, 2026.

  • If an investment is held for 5 years before December 31, 2026, then 10% of the gain is excluded permanently.
  • If the investment is held for 7 years, then 15% of the gain is excluded permanently.
  • And if the investment is held for more than 10 years, appreciation on the initial investment can be tax free, including no depreciation recapture.

It’s important to note that this is a federal tax provision. States and localities may not all follow the federal rule.

Who can benefit from Opportunity Zones? Amongst others:

  • Business owners looking to start or expand businesses inside an Opportunity Zone
  • Developers with existing or potential projects inside Opportunity Zones
  • Investment Funds looking to invest in real estate or start-up businesses located inside of Opportunity Zones
  • Investors with unrealized or realized capital gains from sales of businesses, securities, or real estate
  • Owners of buildings inside of Opportunity Zones
  • Owners of land inside Opportunity Zones

Unlocking Opportunity Zone Potential: Insights from Isaac Jones

Perkins & Co shareholder Isaac Jones joins the HFO Multifamily Marketwatch podcast to explore how Opportunity Zone investments are transforming communities across Oregon and Washington. From the program’s origins under the 2017 Tax Cuts and Jobs Act to the new Opportunity Zone 2.0, Isaac breaks down the tax benefits for investors and shares which types of projects are best positioned to drive both returns and local impact.

Discover how Opportunity Zones can help defer capital gains, reduce recognized gains over time, and achieve tax-free appreciation on long-term investments—all while revitalizing communities in the Pacific Northwest.

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