Opportunity Zone

Federally designated census tracts where investing capital gains can defer and reduce capital gains tax.

Created by the 2017 Tax Cuts and Jobs Act. You roll a capital gain (from any source — stock sale, business sale, prior real estate) into a Qualified Opportunity Fund within 180 days, defer the gain until 2026, and if you hold 10+ years, the appreciation in the QOF is tax-free. Real estate is the most common QOF investment type. Watch for: substantial-improvement requirement (must double the basis of the building within 30 months), heavy compliance burden, and the fact that the underlying real estate still needs to make sense on its own merits — the tax benefit is real but it won't save a bad deal.