How to Qualify for Opportunity Zone Tax Breaks in 2025

Opportunity Zones (OZs) offer one of the most compelling tax incentives in the United States. Originally introduced as part of the Tax Cuts and Jobs Act of 2017, these zones were created to channel long-term investment into low-income communities. In exchange, investors receive significant tax breaks.

As of 2025, some benefits are phasing out, but the core structure is still active. This guide walks you through how to qualify for Opportunity Zone tax breaks — from timelines and fund setup to compliance. It also covers how you can use Atlas, a browser-based GIS platform, to make every step more efficient and accurate.

Step 1: Understand the Tax Benefits

Before diving into eligibility, here’s what you’re aiming for:

1. Deferral of Capital Gains

You can defer paying taxes on capital gains if you reinvest them into a Qualified Opportunity Fund (QOF) within 180 days of the sale.

2. Elimination of Capital Gains on New Investments

If you hold your investment in the QOF for at least 10 years, you can eliminate taxes on any appreciation from the QOF investment itself.

As of 2025, step-up basis benefits for 5- and 7-year holds no longer apply. The 10-year exclusion is the primary remaining benefit.

Step 2: Identify Eligible Capital Gains

The funds you invest must come from capital gains. This includes:

• Gains from selling stocks or business interests
• Gains from the sale of real estate
• Short- and long-term capital gains

Make sure to track the date of the gain. You have 180 days from the recognition date to reinvest into a QOF. That date can vary depending on your filing status and structure.

Step 3: Invest Through a Qualified Opportunity Fund (QOF)

To qualify for tax incentives, investments must go through a QOF — not directly into OZ property.

Setting up a QOF:

• Must be a U.S. partnership or corporation
• Must self-certify using IRS Form 8996
• Must invest 90% of its assets in qualified Opportunity Zone property

You can either set up your own QOF or invest through a fund manager that already operates one.

Step 4: Invest in Qualified Opportunity Zone Property

Your QOF investment must be used to acquire or improve eligible assets, such as:

• Tangible property used in a business operating in an OZ
• Ownership stakes in OZ-based corporations or partnerships
• Commercial or residential real estate (must be substantially improved)

For real estate, you must double the basis of existing buildings within 30 months to meet the "substantial improvement" rule.

Step 5: Track and Report Correctly

You must maintain compliance by:

• Filing IRS Form 8949 to report capital gains deferral
• Filing IRS Form 8997 annually to track QOF investments
• Ensuring your QOF files IRS Form 8996 each year

Good recordkeeping is essential. You need proof of:

• Investment timing
• QOF structure and certification
• Asset eligibility
• Annual valuations

Step 6: Hold for 10 Years

To fully benefit from the OZ tax incentives, you must hold your QOF investment for 10 years or more. At that point, your investment receives a step-up in basis to its fair market value — which means no capital gains tax on appreciation.

How Atlas Makes Every Step Smarter

Knowing the rules is one part. Applying them in the real world is another. This is where Atlas transforms how investors and local governments approach Opportunity Zones.

What is Atlas?

Atlas is a browser-based GIS platform built for decision-making. It helps you explore real estate, zoning, infrastructure, and demographic data in real-time, all through interactive maps.

In the context of Opportunity Zones, Atlas serves as the intelligence layer behind your investment strategy.

Use Atlas to Find the Right Zone

Opportunity Zones are everywhere — over 8,700 across the U.S. But which ones have potential?

With Atlas, you can:

• Instantly visualize all HUD-certified Opportunity Zones
• Layer OZ boundaries over zoning maps, transportation networks, and development trends
• Filter by land use, property value, or vacancy status
• Identify nearby infrastructure projects or public investment corridors

Instead of sorting through spreadsheets or static PDFs, you get a dynamic, clickable map that updates in real time.

Use Atlas to Evaluate Investment Readiness

Not every Opportunity Zone is the same. Some are primed for growth, while others may lack basic infrastructure.

Atlas helps you answer key questions like:

• Is this parcel vacant and zoned for mixed-use?
• Are there pending capital projects that add value?
• What’s the surrounding neighborhood like — schools, transit, job centers?
• Are there city incentives layered on top of federal OZ benefits?

By bringing these answers into one interface, Atlas speeds up due diligence and reduces investment risk.

Use Atlas for Fund and Project Planning

Whether you’re launching your own QOF or contributing to one, you need transparency and coordination. Atlas supports this with:

• Custom map views for your target markets
• Sharing tools to collaborate with advisors, architects, and public agencies
• Overlay tools for zoning codes, height limits, and FAR
• Exportable visuals for pitch decks, proposals, or planning submissions

You can build your entire fund strategy around live, map-based insights.

Use Atlas to Communicate Impact

Investors, cities, and communities all want to see progress.

Atlas helps you visualize:

• Where your QOF capital is being deployed
• What projects are underway or complete
• What benefits (jobs, housing, services) are coming online

Governments can create public-facing dashboards. Developers can create project-specific views. Fund managers can report progress with clarity.

In short, Atlas helps show the "what" and the "why" — not just the "where".

Your 2025 Checklist

Qualifying for Opportunity Zone tax breaks in 2025 is still possible — but the rules are strict, and the window for full benefits is narrowing. It’s more important than ever to be strategic, fast, and data-driven.

Atlas helps at every step. From discovery and due diligence to investment and impact reporting, it’s the platform that connects your financial goals with real-world progress in Opportunity Zones.

Explore smarter. Invest better. Show your impact.

Start using Atlas for your Opportunity Zone strategy today.