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Proposed Updates to Qualified Opportunity Zone (QOZ) Rules

A group of bipartisan U.S. Senators and U.S. Representatives recently introduced a new bill that, if enacted, would make several significant changes to the Opportunity Zone program. This Client Advisory summarizes the key modifications included in the proposed bill, the Opportunity Zones Transparency, Extension, and Improvement Act (available here).


Subject to limited exceptions, the proposed bill would terminate Opportunity Zone status for certain census tracts with a median family income exceeding 130% of the national median family income (based on the 2020 U.S. Census). Existing qualifying investments in Opportunity Zones would be unaffected by the disqualification of these current zones, provided that the investments satisfy certain requirements. Additionally, the bill would authorize state governors to nominate additional census tracts as Opportunity Zones to replace the newly disqualified tracts.


The proposed bill would extend the deferral period for capital gains invested in Qualified Opportunity Funds. Under the proposed bill, the deferral period for paying the deferred tax on qualifying investments would be extended from December 31, 2026 to December 31, 2028.


The extension of the deferral period discussed above would restore and revise the ability of taxpayers to eliminate up to 15% of the deferred gain – these rules are discussed in our prior Client Advisory (available here).  As proposed, qualifying investments made (i) prior to December 31, 2023 and held for at least 5 years, would have 10% of the deferred capital gains excluded from income, and (ii) qualifying investments made by the end of this year (i.e., 2022) and held for at least 6 years would have an additional 5% of the deferred capital gains excluded from income.


The proposed bill would establish new information reporting requirements on qualified Opportunity Zone investors, Qualified Opportunity Funds, and Qualified Opportunity Zone Businesses. The proposed bill would also impose penalties for the failure to make timely, complete, and accurate Opportunity Zone-related filings.  


The proposed bill would authorize Opportunity Zone investments through “Qualified Feeder Funds.” This change would enable Qualified Opportunity Funds—which currently cannot invest in other Qualified Opportunity Funds—to make such investments.  

© 2007-2023 Hill Ward Henderson, All Rights ReservedNational Law Review, Volume XII, Number 124

About this Author

Katherine E. Cole Land Use and Real Estate Lawyer Hill Ward Henderson

Katie is a Shareholder in the firm’s Land Use and Real Estate Group. Her practice primarily involves representing real estate owners in the development of commercial projects and residential subdivisions throughout Pinellas & Pasco Counties. Katie serves clients from the firm’s Clearwater office.

She handles development issues for clients including land use plan amendments, zoning map amendments, planned developments, local government site plan approvals, drafting development agreements, negotiating resolutions for Code Enforcement cases, environmental permitting at the local...

S. Katherine Frazier Attorney Commercial Transactions Hill Ward Henderson Tampa

Katherine Frazier's practice focuses on various types of commercial transactions in both the real property and business areas, including land acquisition and development, leasing, financing, and title insurance matters.

She has actively represented automobile dealerships, with a particular emphasis on dealership acquisitions and dispositions and related real property transactions. Katherine has represented a NYSE dealership group in the acquisition of a portfolio of 32 dealership properties with a purchase price in excess of $200 million.

Alexandra Prati Attorney Business Transactions Hill Ward Henderson Tampa

Alexandra’s practice primarily involves federal and state tax planning for business transactions. Alexandra also engages in general business and corporate matters, including entity formations, entity conversions, investment and acquisition transactions, employment agreements, and equity incentive and other compensation plans.

During law school at Vanderbilt University, Alexandra was a student attorney for Vanderbilt Community Enterprise Clinic. After graduating from law school, Alexandra obtained her LL.M. in Taxation from the New York...

Jerilyn H. Reed Lending Real Estate Transactions Attorney Hill Ward Henderson

Jerilyn Reed is chair of the firm’s Real Estate Group. Her practice includes institutional lending, real property purchase and sale transactions, commercial development and commercial leasing. Jerilyn’s client base is diverse, ranging from real estate developers, national homebuilders, hoteliers, local, regional and national banks, as well as multifamily owners and operators.

She is active in the community, devoting time to philanthropic and professional organizations. As one of her priority commitments, Jerilyn serves as a trustee on the St....

Justin Wallace Tax Attorney Hill Ward Henderson

Justin is an Associate in the firm’s Corporate & Tax Group.  His practice primarily involves federal and state tax planning and advice for business transactions.  He also engages in general business and corporate matters. 

During law school at the Florida State University, Justin was a member of the Florida State University Law Review and a Judicial Intern for Chief Justice Ricky Polston of the Florida Supreme Court.  After graduating from law school, Justin obtained his LL.M. in Taxation from New York University School of Law, where he received the...