What are qualified opportunity zone (QOZ) investments and what are the three potential tax benefits available to investors?

The Opportunity Zone program, created by the Tax Cuts and Jobs Act of 2017, designated over 8,700 low-income census tracts across the United States where investment is incentivized with three tax benefits: first, reinvesting capital gains in a Qualified Opportunity Fund defers recognition of those gains until December 31, 2026 or earlier disposition. Second, an investor who held the fund for at least five years received a 10% step-up in basis (this benefit has now expired for new investments). Third, and most powerfully, any appreciation earned on the QOZ investment itself is completely excluded from capital gains tax if the investment is held for at least 10 years. This makes the program especially compelling for investors with large capital gains looking for long-term real estate exposure.