The Opportunity Zone (OZ) program, created by the Tax Cuts and Jobs Act of 2017, was heralded as the greatest tax incentive in real estate history.
But as we move through 2026, many of the original deadlines have passed. Investors are asking: Is it too late to invest in an Opportunity Zone fund?
The answer is No, but the strategy has shifted. The “deferral” benefit is shrinking, but the “elimination” benefit—the crown jewel of the program—remains intact.
The Three Benefits (Where We Stand Now)
1. Tax Deferral (Still Active)
You can still defer paying capital gains tax on the money you invest into an OZ fund until December 31, 2026.
- *Status:* The window is closing. If you invest today, you only get months of deferral, not years. This benefit is minimal now.
2. Step-Up in Basis (Expired)
The original program offered a 10% or 15% reduction in the deferred tax if you held for 5 or 7 years *before* the 2026 deadline.
- *Status:* Expired. That ship has sailed.
3. Tax-Free Appreciation (The Holy Grail – Still Active)
This is why you invest. If you hold your OZ investment for 10 years, ANY appreciation on that investment is 100% Federal Tax-Free.
- *Scenario:* You invest $1M of capital gains today. The project is a massive success (like a hotel development in a gentrifying area). In 10 years, that $1M investment is worth $3M.
- *The Tax:* You pay $0 tax on the $2M profit. Zero.
The Strategy for 2026
Because the deferral window is closing, investing in an OZ fund today strictly for short-term tax relief makes no sense. You invest today for the long-term tax-free growth.
This means Deal Selection is paramount.
In 2019, people threw money into bad OZ deals just to save on taxes. In 2026, the deal must make sense *without* the tax benefit. The tax-free exit is just the cherry on top.
Primior’s OZ Approach
We target Opportunity Zones in Southern California that are in the path of progress—areas already seeing organic growth, not speculative deserts. We build high-quality assets (multi-family, medical, hospitality) that will appreciate significantly over a 10-year hold.
If you have a significant capital gain event this year (sale of a business, stock, or property), the OZ window is still the most powerful wealth multiplier in the tax code. Review our active OZ funds.
