What happens on December 31, 2026 is the statutory recognition of the deferred capital gains. If you keep the investment for at least 10 years since original investment, you will get the tax exemption of the increase in value.
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What happens with my OZ investments if the program sunsets on Dec. 31, 2026?
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There is no planned sunset. If the program does end up sunsetting, it depends on what subsequent legislation says.
The opportunity zone (OZ) program "sunsets" on December 31, 2026 with respect to new investments in qualified opportunity funds (QOFs). Your existing QOF investments will continue to be QOF investments, although you will be required to recognize the gain you invested in the QOFs and deferred, in an amount equal to the lesser of the gain invested in each QOF and the value of such QOF, over your tax basis in such QOF.
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