The Real Deal, citing the Wall Street Journal, reports that billions of dollars in capital gains deferred into Opportunity Zone 1.0 funds become taxable at the end of 2026. Treasury could see about $29 billion in additional tax revenue from the wave; more than $75 billion in gains had been deferred through 2024. The tax is tied to the original deferred gain, so an owner can owe even without selling the Opportunity Zone asset. Higher borrowing costs have made it harder to refinance projects to cover the bill, and funds are scrutinizing appraisals where property values have fallen below the original investment. Selling a loser can offset other gains but also walks away from the 10-year exclusion on the fund's own appreciation. This is the original program's December 31, 2026 recognition date — unchanged for OZ 1.0 investments — not the OZ 2.0 map. New QOF investments on or after January 1, 2027 follow OZ 2.0's rolling five-year deferral and 10% basis step-up (30% for qualified rural funds).
Original reporting by Daniel Cho for Opportunity Zone Invest, an independent OZ 2.0 research site. Facts are drawn from the primary sources cited above per our editorial standards. Nothing here is tax, legal, or investment advice.
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