The Last Word: Federal Opportunity Zones
May 9, 2025
For nearly a decade, the federal Opportunity Zone (OZ) program has been a transformative tool for real estate developers, particularly in the multi-family housing sector. With rental demand surging in high-cost metropolitan areas, developers have leveraged the OZ program to increase housing inventory in underserved communities, benefiting from the substantial tax incentives.
However, the technical requirements—especially the substantial improvement test — work best for ground-up build projects versus rehabs. When a Qualified Opportunity Fund (QOF) acquires improved real estate (rather than raw land), the fund must make improvements at least equal to the building’s tax basis within a 30-month period.