Congressional action in the coming months will determine whether new Opportunity Zone investors can access tax-free growth beyond 2026. New legislation promises enhanced benefits, but the surprising lack of a grandfather provision could slow the flow of capital to opportunity zone communities if this oversight is not corrected.
Congress Needs to Act to Keep OZ Tax-Free Growth From Expiring
Time is running out for Opportunity Zone investments. Without new legislation, any capital gains taken after December 31, 2026, will lose eligibility for tax-free growth—the program’s most valuable benefit. However, investors who establish positions before that deadline will retain tax-free growth privileges through the program’s current expiration date of December 31, 2047.
This creates an urgent window for action, but it’s complicated by proposed enhancements that could make waiting worthwhile—if Congress gets the details right.
Legislative Timeline: What to Expect
The path forward for Opportunity Zones 2.0 is taking shape in Washington:
May 2025: The U.S. House passed the One Big Beautiful Bill Act (OBBBA) by a razor-thin 215-214-1 margin, including significant extensions and enhancements to the Opportunity Zones program.
June 2025: The Senate is expected to introduce its version of the legislation by mid-to-late June, with a full Senate vote anticipated before the July 4th recess.
Summer 2025: The final bill is expected to be signed into law before Labor Day, assuming both chambers can reconcile their differences.
Three Game-Changing Provisions Every Investor Should Track
1. Opening the Door to Non-Capital Gains Investment
For the first time, the House bill would allow regular cash—not just capital gains—to access Opportunity Zone tax benefits. Under the proposal, taxpayers could invest up to $10,000 of cash over their lifetime into Qualified Opportunity Funds (QOFs) and receive the same “Roth IRA-like” tax-free growth treatment.
While the $10,000 limit is modest, this represents a fundamental shift toward democratizing access to these powerful tax benefits. We are hopeful the Senate will increase this threshold significantly.
2. Extending the Deferral Period and Bringing Back Capital Gains Reduction
The House bill proposes a deferral period lasting until 2033 and resurrects a popular feature from the original program: actual reduction of the initial capital gains tax burden. After holding a QOF investment for five years, investors would permanently eliminate 10% of their original capital gain tax liability.
3. The Critical Flaw: No Grandfather Protection
Here’s the problem: the House bill restricts these enhanced benefits to investments made after January 1, 2027. This creates an incentive to pause investments until the enhanced benefits are available. If the issue is not addressed, capital flows may dry up for these low-income neighborhoods until 2027. Clearly, this is contrary to the intent of the OZ legislation. We are optimistic that the Senate will include a grandfather provision ensuring current investors receive the enhanced benefits, or risk creating an investment drought that undermines the program’s community development goals.
How Three Potential Legislative Outcomes Could Affect OZ Investing
1. If opportunity zone incentives are not renewed:
This would create significant investor interest prior to expiration of the program. The 100% tax elimination benefit would last until 2047 but investors would have to invest capital gain realized no later than December 31, 2026 to participate. By 2027, Opportunity Zone investors may hold a unique advantage—having secured access to a now-closed IRS program offering decades of tax-free growth.
2. If opportunity zone benefits are renewed but only apply to investments made after January 1, 2027 (As proposed in the current House version of the bill):
This would slow OZ investments until the enhanced benefits become available in 2027. The whole purpose of the program is to encourage capital investment in these low-income neighborhoods. Crafting a bill that will likely slow OZ investments for over a year seems counterproductive. We hope the Senate’s version of the bill will correct this issue.
3. If current investments are grandfathered into the refreshed opportunity zone tax incentives:
This would be the most beneficial outcome for investors. Ideally, the grandfather provision would include all current OZ investors, extending their deferral period from 2026 to 2033 and making them eligible for the 10% tax elimination. However, the provision could be restricted to recent OZ investments, those made in 2025 or later, for example.
Next Steps
The coming months will be critical for Opportunity Zone investors and the communities that depend on this capital. We recommend the following actions:
- Stay informed about legislative developments, particularly Senate modifications to the House bill.
- Consult with tax professionals about timing strategies given the current uncertainty.
- Engage with representatives to support a grandfather provision protecting current investors.
The Opportunity Zones program has channeled billions of dollars of capital investment into communities that need it most while providing attractive tax benefits to investors. It is important for Congress to get Opportunity Zones 2.0 right.
For more information about Opportunity Zone investment strategies and legislative updates, contact our team at invesorrelations@parkviewozreit.com or 617-971-8807.
Park View OZ REIT: The Streamlined Approach to QOF Investing
Unique Public Access: Park View OZ REIT is the only Qualified Opportunity Fund with publicly traded shares (trading symbol: PVOZ).
Flexible Entry Options: Begin with as little as one share on the open market or $10,000 through our subscription agreement.
Investment Timeline Freedom: Exit at your discretion without penalty. With no planned 10-year liquidation, maximize potential tax-free growth through 2047.
Simplified Tax Reporting: Avoid the complexity and delays of partnership K-1 tax forms.
Open to All Investors: No accreditation requirements to participate.
Convenient Purchasing Methods: Buy shares through your existing brokerage account or directly via our website’s electronic subscription agreement.
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Materials provided by Park View OZ REIT or our affiliates have been prepared for informational purposes only and are not intended to provide or be relied on for tax, legal, or financial advice. You should consult your own tax and legal advisors before engaging in any transaction.