Eligible gains. A long-term home.
Opportunity Zones are communities designated under federal law to encourage long-term private investment. Investors who reinvest eligible capital gains in a Qualified Opportunity Fund may defer tax on those gains and, after a long-term hold, may qualify for additional tax benefits.
What Opportunity
Zones are
Opportunity Zones were created by the Tax Cuts and Jobs Act of 2017 to encourage long-term investment in designated lower-income communities. In 2025, Congress made the program permanent through the One Big Beautiful Bill Act (Public Law 119-21), which also changed how the tax benefits work for new investments.
Under the renewed program, states nominate new zones every ten years. The first new round of designations was completed in 2026 and takes effect January 1, 2027. Zones designated under the original 2017 law remain in place through December 31, 2028.
What a Qualified Opportunity Fund is
A Qualified Opportunity Fund, or QOF, is an investment vehicle organized as a corporation or partnership for the purpose of investing in Opportunity Zone property. A QOF must hold at least 90 percent of its assets in qualifying Opportunity Zone property, tested twice a year, and self-certifies with the IRS by filing Form 8996 annually. Individual investors who hold QOF investments report them each year on Form 8997.
How this relates to Icon America’s approach
Icon’s real estate work centers on student housing and multifamily communities in university markets. Opportunity Zone funds apply that same operating and development discipline to communities inside designated zones, where the program’s long-term holding requirements align with how we already think about real estate: build or improve, operate well, and hold for value.
Our Opportunity Zone fund offerings are made only through their applicable offering documents, which describe the strategy, terms, fees and risks in full. Specific properties, locations and availability are shared with qualified investors as part of that process.
Who it may be relevant for
Opportunity Zone investing is designed for investors who have realized, or expect to realize, eligible capital gains, for example from the sale of stocks, a business, real estate or other investments, and who are prepared to hold a long-term, illiquid real estate investment. Unlike a 1031 exchange, the gain does not have to come from real estate, and only the gain, not the full sale proceeds, needs to be invested.
- Eligible capital gains from the sale of stocks, a business, real estate or other investments
- Generally 180 days from the sale to invest the gain in a Qualified Opportunity Fund
- A long-term outlook: the most significant potential benefits require holding for 10 years or more
Opportunity Zone fund
or 1031 exchange?
Both defer capital gains tax. They start from different places and follow different rules. Many investors explore both.
| Question | 1031 Exchange | Qualified Opportunity Fund |
|---|---|---|
| What can be sold? | Real property held for investment or business use only | Almost any asset that produces an eligible capital gain: stocks, bonds, a business, real estate and more |
| How much must be reinvested? | Generally the full sale price and equity, with debt replaced, to defer all gain | Only the gain, not the full proceeds |
| Key deadlines | Identify replacement property within 45 days; close within 180 days | Generally invest the gain in a QOF within 180 days of the sale |
| What is acquired? | Like-kind replacement real estate, typically direct or fractional ownership | An equity interest in a fund that invests in Opportunity Zone property |
| How long is the deferral? | Until the replacement property is sold without another exchange | Until the QOF interest is sold or an inclusion date set by law, whichever is first |
| Long-term benefit | Continued deferral through successive exchanges | After a 10-year hold, an election to exclude appreciation on the QOF investment from tax |
Summary for general education only. Each program has detailed requirements and exceptions. Sources: IRS Opportunity Zones FAQ; IRS like-kind exchange tax tips.
Opportunity Zone
basics
General answers based on current IRS and Treasury guidance as of October 2026. Your tax adviser can apply them to your situation.
What is a Qualified Opportunity Fund?
A Qualified Opportunity Fund (QOF) is a corporation or partnership organized to invest in Qualified Opportunity Zone property. It must hold at least 90 percent of its assets in qualifying property, measured at the midpoint and end of each tax year, and it self-certifies with the IRS by filing Form 8996 each year. Investors do not apply to the IRS individually; they invest in a QOF and report their investment annually on Form 8997.
What types of gains may qualify?
Eligible gains include capital gains and qualified Section 1231 gains from the sale or exchange of property to an unrelated party. That can include gains from stocks, bonds, mutual funds, a business, real estate, or other investment property. Only the gain, not the entire sale proceeds, needs to be invested in the QOF. Gains from transactions with related persons do not qualify.
Gains that flow through a partnership, S corporation, trust or estate can also qualify, and the owner may have a choice of start dates for the 180-day investment window.
How does this differ from a 1031 exchange?
A 1031 exchange applies only to real property held for investment or business use, and generally requires reinvesting the full sale value into like-kind real estate within strict 45-day and 180-day deadlines. A QOF investment can be funded with eligible gains from almost any type of asset, requires investing only the gain, and the investor acquires an interest in a fund rather than a specific replacement property. The two programs also differ in how long deferral lasts and in the long-term benefits available. The comparison table above summarizes the main differences.
What timing and holding requirements apply?
Generally, an investor has 180 days from the date a gain is recognized to invest it in a QOF. The tax benefits then depend on when the investment is made and how long it is held.
For QOF investments made on or before December 31, 2026 (the original 2017 rules), deferral of the invested gain ends on December 31, 2026 or when the QOF interest is sold, whichever comes first, so the deferred gain is recognized on the investor’s 2026 tax return. After a 10-year hold, the investor may elect to step up the basis of the QOF investment to its fair market value when it is sold, which can exclude the appreciation on the investment from tax.
For QOF investments made after December 31, 2026 (the renewed program), the invested gain is deferred for up to five years, or until the QOF interest is sold if earlier. After five years, 10 percent of the deferred gain is excluded through a basis increase (30 percent for investments in a qualified rural opportunity fund). After a 10-year hold, the investor may again elect a fair-market-value basis step-up when the investment is sold, with the step-up measured no later than 30 years after the investment date.
The IRS has issued transitional guidance and proposed regulations for the renewed program, and some details may change as final rules are published.
Is the Opportunity Zone program permanent, and what is “Opportunity Zones 2.0”?
Yes. The One Big Beautiful Bill Act (Public Law 119-21), signed July 4, 2025, made the Opportunity Zone program permanent, with new zones designated every ten years. “Opportunity Zones 2.0” is an informal name used in the industry for this renewed program; it is not a legal term. The first new round of zone designations was completed in 2026 and takes effect January 1, 2027. Zones designated under the original 2017 law remain in effect through December 31, 2028.
Are the tax benefits guaranteed, and are there risks?
No tax outcome is guaranteed. The benefits depend on the type and timing of your gain, when and how long you hold the investment, the fund’s continued compliance with program rules, and your individual tax situation. Opportunity Zone funds are long-term, illiquid real estate investments and involve risk, including possible loss of principal. Review the fund’s offering documents and consult your tax, legal and financial advisers before investing.
How can I request current offering information?
Complete the request form and select “Exploring potential capital gains deferral,” or call (800) 580-1031. A member of our team will contact you to discuss your situation, confirm suitability, and share the appropriate offering materials.
Sources: IRS, Opportunity Zones Frequently Asked Questions; IRS, Certify and maintain a Qualified Opportunity Fund; IRS Notice 2026-40; Rev. Proc. 2026-14; U.S. Treasury press release on 2026 zone designations. This page is general information, not tax or legal advice.
The other two opportunities
One team, three paths. Explore one, or more than one.
Your gains.
Our next conversation.
Tell us about the gain you have realized or expect to realize, and your timeline. Our team will review your inquiry and contact you.