Strategic, compliant, tax-free growth
Qualified opportunity zones offer powerful tax advantages for investors and businesses supporting economic development in underserved communities.
However, investors looking to leverage opportunity zone funds face complex IRS regulations and challenges with identifying eligible zones and qualifying assets, structuring investments to meet compliance requirements and timing contributions effectively. Missteps in any of these areas can lead to disqualification or reduced benefits.
Proper understanding and execution can be the difference between maximizing tax savings and missing out on valuable incentives. Whether you’re launching a qualified opportunity fund (QOF), investing in real estate in a QOZ tract or expanding a business into a designated zone, Wipfli’s opportunity zones team provides strategic guidance to help you:
- Defer capital gains taxes under the opportunity zone rules.
- Structure investments to meet IRS standards.
- Maintain compliance with new IRS regulations.
- Identify eligible zones and verify all testing requirements are met for both the QOZB and QOF.
- Model tax benefits of opportunity zones versus traditional investments.
Why Wipfli?
Wipfli combines industry-specific support with our deep tax law knowledge and years of experience helping clients maximize opportunity zone benefits.
Wipfli takes a client-first approach that focuses on transparent communication and proactive guidance to help you avoid costly mistakes. And we offer customized solutions tailored to the unique needs of investors, developers and business owners.
Our tax advisors also closely monitor changes in tax laws, helping you stay informed about legislative developments and how to optimize your investment timing and strategy.
Wipfli’s opportunity zone services
Opportunity zone strategies and planning
We help you design a tax-efficient investment strategy tailored to your goals, timelines and risk profile. |
Fund formation and structuring
From entity setup to compliance documentation, we guide you through the process of launching and managing a QOF. |
Tax compliance and reporting
Stay ahead of IRS requirements with experienced support for annual filings, asset testing and investor disclosures. Wipfli can help you stay ahead and remain compliant even as reporting requirements change. |
Audit and attestation services
We provide comprehensive audit and attest services tailored to opportunity zone investing, helping you maintain compliance with regulatory requirements and delivering transparent, reliable financial reporting for stakeholders. |
Zone qualification and due diligence
We analyze census tract data, business activities and asset locations to help ensure your investments meet opportunity zone criteria. |
Rural tract advisory
New rules have been introduced for rural areas within opportunity zones. Wipfli is here to help you navigate them and maximize your benefits. |
Our team
Dannielle Lewis, CPA
Dannielle Lewis is a partner in the tax practice, focused on serving clients in the construction and real estate industry. She advises clients on complex tax transactions involving partnership interest exchanges or business sales.
Brad Werner, CPA, MBA
Brad Werner is the Chicago market construction and real estate practice leader and an audit partner whose primary focus is on attest and accounting services. Working closely with members of management to improve their overall operations, he provides value to clients by offering broad experience in many industries and aspects of accounting and financial reporting. Brad ensures efficiency through solid planning and organizational skills in coordinating all aspects of each engagement. He effectively communicates complex accounting issues and solutions to his clients, enhancing overall retention.
Opportunity zones FAQ
What are the primary opportunity zone tax benefits?
The three-tier tax advantage structure makes opportunity zone investing uniquely powerful:
- Deferral: Postpone paying capital gains taxes on your original investment until December 31, 2026, or when you sell your opportunity zone investment (whichever comes first).
- Reduction: Receive a 10% reduction in your deferred capital gains if you hold the investment for five years, and an additional 5% reduction (total 15%) if held for seven years.
- Elimination: Most remarkably, pay zero capital gains tax on any appreciation from your opportunity zone investment if held for at least 10 years.
With opportunity zones, you can turn capital gains into a completely tax-free investment vehicle.
Are there proposed changes that might affect future investments?
Congressional discussions continue around program extensions and modifications. While the current program runs through 2028 for new investments, proposed legislation could extend deadlines and expand eligible activities. Staying informed about legislative developments helps optimize your investment timing and strategy.
How does the December 31, 2026, deadline affect my investment strategy?
This critical deadline creates urgency for maximizing your benefits. Any capital gains invested before this date can still qualify for deferral, but the reduction benefits diminish over time. Investors who acted in 2019 could achieve the full 15% reduction, while those investing now can still capture meaningful advantages through the 10-year tax-free appreciation benefit.
Can I reinvest opportunity zone gains into another opportunity zone?
Yes, and this creates a powerful wealth-building strategy. After holding your initial investment for 10 years, you can sell it tax-free and reinvest those proceeds into another qualified opportunity zone fund, potentially creating a perpetual tax-free investment cycle.
What’s the minimum investment required for opportunity zone funds?
Unlike many exclusive investment vehicles, opportunity zones welcome investors at various levels. Most qualified opportunity zone funds set minimums between $25,000 and $100,000, making this strategy accessible to a broader range of investors than traditional tax shelters.
How quickly must I invest my capital gains?
You have 180 days from the date you realize your capital gains to invest in a qualified opportunity zone fund. This timeline is nonnegotiable; missing it means losing the deferral benefit entirely. Investors often identify potential opportunity zone investments before realizing their gains, so that they’re ready to act swiftly.
What types of capital gains qualify for opportunity zone investment?
The program accepts gains from virtually any source, including:
- Real estate sales (the most common).
- Stock and bond transactions.
- Business asset sales.
- Cryptocurrency gains.
- Partnership distributions.
Opportunity zones provide flexibility to diversify your portfolio while maintaining tax advantages across multiple asset classes.
Must I invest 100% of my capital gains?
No, you can invest any portion of your capital gains and receive proportional benefits. However, investing the full amount maximizes your tax deferral. Many investors choose to invest their entire gain amount plus additional capital to amplify their potential returns.
Can I exit my investment before the 10-year holding period?
Yes, but you’ll lose the tax-free appreciation benefit and may trigger your deferred capital gains taxes. Strategic planning is crucial. Consider your investment timeline carefully before committing, as an early exit can significantly reduce the program’s benefits.
What are the key compliance requirements I must maintain?
Opportunity zone compliance centers on three critical areas:
- Asset test: 90% of fund assets must be invested in qualified opportunity zone property.
- Business use test: Properties must be used in active business operations within the zone.
- Timeline requirements: Specific deadlines for deployment and improvement completion must be met.
Missing any compliance requirement can disqualify your entire investment, making professional guidance essential.
What happens if my investment becomes noncompliant?
Noncompliance triggers immediate tax consequences: You’ll owe the deferred capital gains taxes plus interest and penalties. However, many compliance issues can be cured if addressed quickly, making regular monitoring essential.
How often must I report on my opportunity zone investment?
Annual reporting through Form 8996 for the fund and Form 8997 for individual investors. These forms track your investment timeline so that you receive appropriate tax benefits. Many investors work with experienced CPAs like Wipfli, who are familiar with opportunity zone reporting requirements.
Let’s talk about maximizing your opportunity zone strategy:
Opportunity zones 2.0
The One Big Beautiful Bill is bringing significant changes to opportunity zones in 2026. Watch our webinar to learn what’s new, what it means for your portfolio and how to position yourself for long-term tax advantages.
