Qualified Opportunity Zones
Advisory and operational support for Opportunity Zone investors — from fund formation through the year-ten exclusion hold.
A federal program with long-horizon benefits.
The Qualified Opportunity Zone program was created under the 2017 Tax Cuts and Jobs Act to channel private capital into designated economically distressed communities. For investors, the program offers three potential benefits when capital gains are reinvested through a Qualified Opportunity Fund:
- 01
Deferral of original capital gain
Tax on the original gain is deferred until the earlier of an inclusion event or the program's mandatory recognition date.
- 02
Step-up in basis after 5 and 7 years
For qualifying investments, basis adjustments reduce the eventual gain recognized.
- 03
Exclusion of post-investment appreciation at year ten
For investments held at least ten years, appreciation on the QOF investment itself can be permanently excluded from federal income tax — the central long-term benefit of the program.
Tax outcomes depend on individual circumstances, the structure of the investment, and ongoing program compliance. HMS does not provide tax or legal advice; we operate alongside your advisors.
How HMS helps clients navigate them.
Opportunity Zone investments fail more often on operations than on strategy. We focus on the ground-level discipline required to preserve the program's benefits over a decade-long hold.
Structural design
Property selection
Operational continuity
Advisor coordination
A six-phase engagement.
A complete Opportunity Zone engagement spans a decade or more. The phases below describe the structure of a typical relationship from initial consultation through long-term hold.
Phase 01
Capital gains assessment & timing
We begin by reviewing the realized capital gain, the 180-day deferral window, and the investor's broader tax posture. Timing matters: structure must be in place before deferral elections are made.
Phase 02
QOF formation & QOZB structuring
We design and operate the Qualified Opportunity Fund and the underlying Qualified Opportunity Zone Business — coordinating with your tax counsel on entity selection, formation, and the operating documents that govern compliance.
Phase 03
Property identification within zones
Not every property in a designated zone is a fit. We identify candidate assets that meet zone-eligibility criteria, the substantial improvement requirements, and the investor's underlying return expectations.
Phase 04
Capital deployment & substantial improvement
We oversee the deployment timeline, the substantial improvement program, and the documentation required to evidence compliance with the program's improvement and basis-doubling thresholds.
Phase 05
Operational compliance & reporting
Year-over-year, we maintain the operating discipline that the program requires — semi-annual asset tests, working capital safe-harbors, and the records that support the long-term hold.
Phase 06
Long-term hold through year ten
The year-ten step-up is the central financial benefit. We design and operate the hold so that the exclusion is preserved, including planning for the eventual exit or basis-step-up election.
Discuss your gain.
Opportunity Zone strategy is time-sensitive — the deferral window is 180 days from gain realization. The most productive conversations begin early.