QOZ 101
The questions investors, developers, and owners ask us most. For the deadlines themselves, see Key Dates.
A low-income census tract designated by a state governor and certified by the U.S. Treasury. Investors who move eligible capital gains into projects or businesses inside these zones — through a Qualified Opportunity Fund — can earn substantial federal tax benefits. The program was created in 2017 and made permanent in 2025.
QOZ 1.0 is the original 2018 map: 8,765 designated tracts that stay designated through December 31, 2028. QOZ 2.0 is the new permanent program: governors nominate a fresh set of zones during 2026 from 25,461 eligible tracts (Treasury's September 2026 list), the new map goes live January 1, 2027 for ten years, and the benefit structure is upgraded — including a rolling 5-year deferral and an enhanced 30% basis step-up for rural zones. Both maps stay designated through the end of 2028, but IRS Notice 2026-40 generally limits property acquired after 2026 to 2.0 zones (see the 1.0 question below).
Three stack together for investments made after December 31, 2026:
① Deferral — capital gains you roll into a Qualified Opportunity Fund aren't taxed for five years.
② Step-up — after five years, 10% of the deferred gain is forgiven (30% in qualified rural funds).
③ The big one — hold the fund investment 10+ years and all appreciation on it is federal-tax-free.
Anyone with eligible capital gains — from selling stock, a business, real estate, crypto, almost any appreciated asset. You generally have 180 days from the sale to invest the gain into a Qualified Opportunity Fund. Ordinary income and non-gain cash don't get the tax benefits (they can still be invested, just without the perks). Most funds are private offerings limited to accredited investors.
The investment vehicle — a corporation or partnership that self-certifies with the IRS and must keep at least 90% of its assets in Opportunity Zone property or businesses. Most funds hold projects through a subsidiary Qualified Opportunity Zone Business (QOZB). Compliance is real: asset tests twice a year, working-capital plans for construction, and expanded IRS reporting with daily penalties for funds that skip it.
OZ 2.0 gives rural tracts the richest benefits in the program: a 30% basis step-up (vs. 10% standard) through Qualified Rural Opportunity Funds, and buildings only need 50% improvement instead of 100% to qualify. Roughly a third of eligible tracts are rural — and identifying the rural zones with real infrastructure (power, connectivity, access) is exactly what our engine does.
Each governor may nominate up to 25% of the state's eligible low-income tracts (rounded up; states with fewer than 100 eligible tracts may nominate up to 25). Most states ran public-input windows in spring and summer 2026 — local governments, economic developers, property owners, and residents submitted cases for their tracts. The governor deadline is September 28, 2026 (October 28 under the single 30-day extension); Treasury then certifies by November 27 (December 28 at the latest if extended), and the map goes live January 1, 2027. Status as of October 27, 2026: Idaho reports its 25 tracts certified, at least a dozen other states and territories have announced submissions, and Treasury has not yet published a certified list — see Key Dates.
Yes — and this is the most misunderstood timing play in the program. You have 180 days from realizing a gain to invest it in a Qualified Opportunity Fund. Do the math: gains you realize directly on or after July 6, 2026 (the sale date counts as day 1) have windows that reach January 1, 2027 — the day the new zones and the upgraded benefits (rolling 5-year deferral, 10%/30% step-ups) go live. Sell from August 1 onward and you have a comfortable month-plus of cushion. IRS Notice 2026-40 confirms that 2026 gains can be deferred by investing on or after January 1, 2027 within the 180 days. (Partnership and installment-sale gains can start their 180 days later — confirm with your CPA.)
Here's the quirk: the final OZ 2.0 map won't exist until Treasury finishes certifying nominations (Treasury's certification deadline is November 27, 2026, or December 28 at the latest if extended; Treasury and the IRS expect to issue the designated list before January 1, 2027). That does not stop you. Realize the gain now, watch certification land, then invest on or after January 1, 2027 into a fund targeting certified zones — all inside your 180-day runway. Sellers who wait for the map before selling will be competing with everyone else's capital; sellers who plan the window now get first position.
Only in narrow cases for new property. The 2018 designations stay in effect through December 31, 2028 (Puerto Rico's through December 31, 2027), but IRS Notice 2026-40 says property a fund or its business acquires after December 31, 2026 generally isn't qualifying property unless it's used in a zone designated after July 4, 2025 — in practice, a 2.0 zone. The exceptions are property bought under a working-capital plan adopted by December 31, 2026 (with at least 10% of the planned funds received and 5% spent by then) and ordinary-course replacements of existing property (not expansions). The notice also lets funds already operating in a 1.0 zone keep treating it as a zone for certain compliance tests through December 31, 2047. It's one of the sharpest questions in the program right now, and exactly the kind of thing to confirm with an OZ attorney (or ask us).
Ground-up real estate development, major rehabilitation ("substantial improvement"), and operating businesses located in the zones. Raw-land banking doesn't qualify, and property generally can't be bought from related parties. Real estate dominates because appreciation is what the 10-year exclusion rewards — which is why data centers, industrial, and housing in rural zones are the hot OZ 2.0 theses.
The next chance is the 2036 nomination round. That's why the 2026 round matters so much for owners and local governments: designations take effect January 1, 2027 and last ten years. Get alerts as Treasury certifies each state's list.
Sometimes. Many states conform to the federal treatment, but several (including California) don't — meaning state tax can still apply to gains that are federally deferred or excluded. Where the property sits and where you live both matter. Verify state conformity before underwriting the benefit.
No. Everything here is general information about a federal program. Opportunity Zone investing involves real tax complexity, securities laws, and deal risk — engage qualified tax and legal counsel before acting. What we provide is the research and data layer: eligibility, ownership, demographics, infrastructure, and diligence intelligence on every zone in America.