Written by Cam Pearce, Director of Tax Research and Education 

In November 2025, we covered how the One Big Beautiful Bill Act (OBBBA) reshaped opportunity zones for the long term including permanence, a rolling five-year deferral, new rural incentives and a redrawn map. Those changes define the program’s future. But if you invested in a qualified opportunity fund (QOF) currently, you’re still living under the old rules, and the old rules point to one hard, upcoming date for gain recognition: Dec. 31, 2026. 

With less than half a year left, here’s what pre-2027 QOF investors should be doing now. 

The Dec. 31, 2026 Inclusion Date Didn’t Go Away for Existing Investments 

OBBBA’s rolling five-year deferral applies only to investments made after 2026. If you deferred a gain into a QOF before 2027, your inclusion event is still Dec. 31, 2026 (or an earlier disposition, if sooner), under the original §1400Z-2 rules. Nothing about that timeline shifted. Practically, that means you’ll recognize gain on your 2026 return, even though OBBBA extended the program for investors going forward. 

Coordinate Early with Your Fund Manager on Valuation 

The amount you recognize is not automatically your full deferred gain. Under §1400Z-2(b), the recognized amount is the lesser of one of the following:  

• The gain you originally deferred.  
• The fair market value (FMV) of your QOF interest on the inclusion date, Dec. 31, 2026. 

If your fund's value has declined since your investment, this rule may significantly reduce the amount of gain you recognize. Any excess of your deferred gain over the FMV of your QOF interest is generally eliminated permanently, with no statutory recapture mechanism. If the fund has appreciated, the FMV limitation will not reduce your recognized gain, but the value is still an important part of the calculation. 

For that reason, investors should discuss the fund's valuation process with the fund manager well before year-end. Determine whether the fund plans to obtain a qualified appraisal or other support for the inclusion-date FMV, when that information will be available, and how it will be communicated to investors. Real estate fund valuations can take weeks to complete, and appraisal firms often have limited capacity late in the year. Early coordination can help ensure the necessary information is available when it is needed for tax reporting and planning.  

Confirm Your Basis Step-Up 

Depending on when you invested, you may be entitled to increase your basis in the QOF interest, which reduces your recognized gain: 

• Investments held five years by the inclusion date get a 10% basis step-up. 
• Investments made before 2020 that reach a seven-year holding period get an additional 5%. This extra step-up was preserved only for pre-2027 investments under the old rules. 

Confirm your exact investment date and holding period.  

If You’re Under Five Years, Understand What “Zero Basis” Means 

Investors who came in later, and won’t reach the five-year mark by Dec. 31, 2026, get no basis step-up. Basis in the QOF interest stays at or near zero, so recognized gain is effectively the full FMV of the investment, subject to the lesser-of cap above. This is where the appraisal becomes especially valuable — it’s the only lever available to you. 

Plan for a Tax Bill Without a Matching Cash Distribution 

Although the deferred gain is generally reported on your 2026 tax return filed in April 2027, the resulting tax liability may need to be reflected in your fourth-quarter 2026 estimated tax payment to avoid underpayment penalties. Because opportunity zone funds do not distribute cash to cover this liability, planning ahead for the required liquidity is essential. 

Check Your State’s Conformity Rules 

Not every state automatically follows the federal QOF deferral and exclusion rules. Some require separate conformity legislation or an approval process. Alabama, for example, required advance approval through Alabama Department of Economic and Community Affairs, and that application window closed at the end of 2024. If you invested through a QOF and haven’t confirmed your state’s treatment, do it well before the federal inclusion event forces the issue. 

Bottom Line 

OBBBA’s headline changes are about opportunity zones’ future. But if your capital is already in a pre-2027 QOF, the rules that matter to you over the next five months are the old ones, and Dec. 31, 2026 is a fixed date, not a moving target. The window to get an appraisal, confirm your holding period and plan your cash is now, not December. 

If you’re approaching the five-year mark, sitting on a fund that’s changed in value, or simply unsure where your investment stands, talk to our real estate tax pros before year-end. If you need assistance finding an appraiser, we are also happy to help you.  

As with any tax planning strategy, opportunity zone investments should be evaluated in the context of your overall financial situation. Current and suspended losses, state tax rules and other tax attributes may affect the results. Meeting with your tax advisor before key recognition events can help you anticipate upcoming tax consequences and position yourself to take advantage of available planning opportunities.