Sponsored: QOZs Continue to Deliver Powerful Tax Advantages

By Nati Kiferbaum, Chief Strategy Officer, Inland Real Estate Investment Corporation

The recently enacted One Big Beautiful Bill Act, or OBBBA, is poised to deliver powerful new incentives for commercial real estate stakeholders starting in 2027. Building on the momentum of the 2017 Tax Cuts and Jobs Act, this landmark legislation aims to expand and refine key tax advantages that have long supported commercial real estate growth.

Notably, the OBBBA introduces promising enhancements for the future with respect to the qualified opportunity zone, or QOZ, program. The QOZ program, both in its current and enhanced form, offers substantial benefits and remains a powerful tool for managing wealth, minimizing taxes, and pursuing long-term growth. For those seeking immediate deferral of capital gains tax on eligible asset sales while participating in the development of underserved communities across the United States, the QOZ program remains a cornerstone strategy. Below is a comparison of the current QOZ program (QOZ 1.0) versus the new program (QOZ 2.0), effective Jan. 1, 2027.

Opportunity zones were created in 2017 to stimulate private investment in more than 8,700 census tracts across the United States that were identified by the U.S. Treasury as economically distressed areas. And there is still time to invest in QOZs. In fact, the QOZ market raised $810 million in the first quarter of 2025, signaling a strong appetite for the program.

Defer Tax on the Sale of Nearly Any Asset

QOZ investments enable taxpayers to defer capital gains on virtually any asset, including stocks, bonds, mutual funds, art, jewelry, cryptocurrency, real estate, and more. In recent years, many investors have realized significant capital gains from business sales, stock market growth, real estate appreciation, or private equity exits that would equate to a hefty tax bill.

QOZ 1.0 Tax Benefits

Under QOZ 1.0, QOZs provide an opportunity to defer tax on capital gains until Dec. 31, 2026, and, more importantly, eliminate capital gains tax entirely on a QOZ investment if held for 10 years or more.

Looking Ahead to QOZ 2.0

The OBBBA introduces significant, positive changes for the QOZ program. Importantly, according to Seyfarth, the QOZ program has been extended indefinitely under the OBBBA. State governors will be able to propose new opportunity zones every 10 years.

Other notable changes include that after Dec. 31, 2026, gains deferred through investment in the QOZ program will be triggered into income on the fifth anniversary of the investment date. Additionally, the 10% basis step-up benefit, which takes effect immediately before the end of the five-year gain deferral period, is permanent under the OBBBA. For QOZ 2.0, all gains that are not prematurely triggered will have the benefit of a 10% basis increase.

The OBBBA also creates a new Qualified Rural Opportunity Fund, or QROF, for “rural areas” defined as any area other than: (1) a city or town with a population of greater than 50,000; and (2) an urbanized area adjacent to a city or town with a population in excess of 50,000. The tax benefits for these QROFs are augmented, including a rolling 30% basis-step up after five years (compared to a 10% step-up for “regular” QOFs).

Bottom Line

Despite time marching toward the burn-off of some of the benefits of the original QOZ program, we believe the QOZ program will remain a strong part of wealth and tax-management strategies for financial and tax advisers and their clients.

Regardless of investment objective – total return, diversification, or simply tax deferral – the QOZ program has introduced a unique strategy that could potentially improve both investment portfolios’ returns and structure while providing economic benefits to underserved communities.

For more information or to discuss any QOZ opportunities, please reach out to an Inland wholesaler at 866-My-Inland, or visit its news and education library on Inland-Investments.com.

This is neither an offer to sell nor a solicitation of an offer to buy any security, which can be made only by an offering memorandum or prospectus that has been filed or registered with appropriate state and federal regulatory agencies and sold only by broker-dealers and registered investment advisers authorized to do so. An offering is made only by means of the offering memorandum or prospectus in order to understand fully all of the implications and risks of the offering of securities to which it relates. A copy of the applicable offering memorandum or prospectus must be made available to you in connection with any offering. This communication is not intended as tax advice.

Some of the risks related to investing in commercial real estate include, but are not limited to: market risks such as local property supply and demand conditions; tenants’ inability to pay rent; tenant turnover; inflation and other increases in operating costs; adverse changes in laws and regulations; relative illiquidity of real estate investments; changing market demographics; acts of God such as earthquakes, floods or other uninsured losses; interest rate fluctuations; and availability of financing.

The views expressed herein are subject to change based upon economic, real estate and other market conditions. These views should not be relied upon for investment advice. Any forward-looking statements are based on information currently available to us and are subject to a number of known and unknown risks, uncertainties and factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.

Headquartered in Oak Brook, Ill., Inland Real Estate Investment Corporation, i.e., Inland Investments, is a real estate investment manager and a member company of The Inland Real Estate Group of Companies Inc., one of the nation’s largest commercial real estate and finance groups. Inland Investments specializes in offering public and private tax-advantaged, growth and income real estate solutions spanning virtually every sector of the commercial real estate market. Since inception, Inland has engaged in real estate, including property management, leasing, marketing, acquisition, real estate brokerage, development, redevelopment, construction, real estate financing and other related services. Inland member companies have facilitated more than $55 billion in acquisitions since inception and currently manage a diverse real estate portfolio of approximately $16 billion across 42 states.

Inland Real Estate Investment Corporation is a sponsor of AltsWire, and the article was published as part of their standard directory sponsorship package.

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