Opportunity Zones

The Three Opportunity Zone Tax Benefits

1. Capital Gains Deferral. Defer recognition of the original capital gain until December 31, 2026 (or earlier sale of the QOF interest).
2. Step-Up in Basis (Historical). For investments held a sufficient period prior to the 2026 deadline, investors received a 10% or 15% step-up in basis on the deferred gain. (This benefit has largely sunset as deadlines passed; check current rules.)
3. Tax-Free Appreciation. If the QOF investment is held for at least 10 years, any appreciation on the QOF investment itself is permanently exempt from capital gains tax. This is the most powerful long-term benefit.

How an Opportunity Zone Investment Works

1. An investor realizes a capital gain (from any source).
2. Within 180 days, the investor invests an amount equal to the gain into a Qualified Opportunity Fund (QOF).
3. The QOF invests in qualified opportunity zone property — real estate or operating businesses located in designated zones.
4. If the investment is structured properly and held for at least 10 years, all appreciation in the QOF investment is tax-free on disposition.

Real Estate Requirements in Opportunity Zones

For real estate to qualify, the investment must constitute either (a) original-use property placed in service in the zone, or (b) substantially improved property where the QOF doubles its basis in the property (excluding land) within 30 months. This requirement essentially means new construction or significant renovation — passive acquisition of existing stabilized property does not qualify. This is why most Opportunity Zone investments are ground-up development or major value-add projects.

Central Florida Opportunity Zones

The Orlando MSA includes Opportunity Zones in multiple submarkets:

• Orange County: Parramore (Downtown Orlando), Pine Hills, parts of South Orlando
• Osceola County: Significant zones in central and eastern Osceola
• Seminole County: Specific zones in Sanford and other locations
• Lake County: Portions of Leesburg and surrounding areas
• Polk County: Lakeland and Winter Haven areas

These zones often include legitimate value-creation opportunities — particularly in submarkets where path-of-growth tailwinds support new construction.

What types of capital gains qualify for Opportunity Zone investment?

Almost any short-term or long-term capital gain qualifies — gains from stocks, bonds, real estate, business sales, cryptocurrency, art, and other capital assets. The gain must be invested in a Qualified Opportunity Fund within 180 days of recognition.

Can I use a 1031 exchange and Opportunity Zone strategy together?

Not directly on the same transaction, but they can be used in sequence. A 1031 exchange defers gain by rolling into a like-kind property; an Opportunity Zone investment defers and potentially eliminates gain by rolling into a QOF. The two programs have different mechanics and constraints. Consult a tax advisor for your specific situation.

How long do I need to hold a QOF investment to get the tax-free appreciation benefit?

At least 10 years. After 10 years, any appreciation in the QOF investment is permanently exempt from capital gains tax on disposition. This is the most powerful long-term benefit of the program.

Where do I find Opportunity Zone investment opportunities in Florida?

Michael R. Linton at Linton Global Solutions and Linton Global Capital structure and source Opportunity Zone development and investment opportunities in Central Florida. Call (312) 612-1031 to discuss your gain timing and investment criteria.

Apply Opportunity Zones to Your Florida Deal

Get a free consultation with Michael R. Linton — 39 years of Central Florida CRE transaction experience.