How Do Opportunity Zones Work?

This post has been updated.

Last week, the Treasury Department and IRS released proposed regulations intended to clarify key questions regarding investing in qualified opportunity funds (QOFs). In addition, the IRS issued a revenue ruling that provides guidance to taxpayers regarding the “original use” requirement for land.

row of urban townhouses

Public comments on the proposed regulations will be accepted until Dec. 28. These proposed regulations may be changed before the agencies finalize them.

To help further clarify what opportunity zones and QOFs are, and how the associated tax benefits work, NAHB has provided answers to several of the most common questions on the subject, including:

  • What are opportunity zones and QOFs?
  • What type of income is eligible for deferral?
  • Can pre-existing entities qualify as a QOF?
  • How can I submit comments to the Treasury and IRS?
  • Will there be additional regulations?

View the answers to these and other FAQs on nahb.org.

Note: NAHB urges all taxpayers to consult with a tax and/or investment advisor prior to making any investment/financial decisions. The information NAHB provides is strictly for informational purposes and highlights only certain aspects of the proposed regulation.

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  1. Sam Pitzulo says:

    I am thinking of building in a opportunity zone. Since I will own the building , what tax breaks or benefits are there for my company?

    • NAHB Now says:

      Thanks for your comment. The blog post includes a link to the FAQ with more detail on the tax benefits provided to investors. Investors in a Qualified Opportunity Fund (QOF) receive tax breaks based on capitals gain income that is invested. The exact benefits depend on the length of time the investment is held, but generally reduce the investors tax liability. We suggest you consult with a tax and/or investment advisor who can provide you with a more detailed assessment on whether your building is an eligible investment and how to set up a QOF.

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