Qualified Opportunity Fund Calculator (Opportunity Zone Tax Benefits 2027)
Estimate the tax effect of rolling a capital gain into a Qualified Opportunity Fund (QOF). Choose when the investment is made, enter the gain, your tax rate, the holding period and an assumed growth rate; the calculator shows the tax on the deferred gain, the basis step-up and the tax on the fund's appreciation. For investments made after 31 December 2026 the law now gives a rolling 5-year deferral, a 10% basis increase at 5 years (30% for a qualified rural opportunity fund) and tax-free appreciation after 10 years. Gains deferred under the old rules are taxed in 2026.
A Qualified Opportunity Fund (QOF) is an investment vehicle that holds property or businesses in designated low-income census tracts called Qualified Opportunity Zones. An investor who puts an eligible capital gain into a QOF within 180 days can defer tax on that gain, reduce the taxable amount after five years, and pay no tax on the fund's own appreciation after ten years.
Qualified Opportunity Fund rules for investments after 2026
The program was due to wind down: under the original rules every deferred gain is included in income by 31 December 2026 at the latest. Public Law 119-21 changed section 1400Z-2 of the Internal Revenue Code for investments made after 31 December 2026, so the incentive now continues on a rolling basis.
| Feature | Invested by 31 Dec 2026 | Invested after 31 Dec 2026 |
|---|---|---|
| When the deferred gain is taxed | On sale, or 31 December 2026 if earlier | On sale, or 5 years after the investment if earlier |
| Reduction of the deferred gain | 10% if held 5 years, 15% if held 7 years, both by the end of 2026 | 10% after 5 years; 30% for a qualified rural opportunity fund |
| Appreciation in the fund | Basis can be stepped up to fair market value after 10 years | Basis equals fair market value after 10 years; frozen at the value 30 years after investing if held longer |
Because the old step-ups needed five or seven years of holding before the 2026 inclusion date, only investments made by the end of 2021 could earn the 10% reduction and only those made by the end of 2019 the 15%.
Worked example: $500,000 gain invested in 2027
An investor rolls a $500,000 gain into a standard QOF in 2027, pays tax on gains at 20% and holds for 10 years at an assumed 7% growth. After five years the basis rises by 10% of the deferred gain, so $450,000 becomes taxable and the tax is $90,000. After 10 years the investment is worth $983,575.68; the $483,575.68 of appreciation is not taxed. Total tax: $90,000. The same investment outside a QOF would cost $100,000 on the original gain plus $96,715.14 on the appreciation, $196,715.14 in all, so the estimated saving is $106,715.14. In a qualified rural opportunity fund the step-up is 30%, cutting the tax on the deferred gain to $70,000.
What the calculator assumes
You enter your own tax rate. The top federal rate on long-term capital gains is 20%, and the IRS notes that individuals with significant investment income may also owe the net investment income tax, so add that if it applies to you. The growth rate is an assumption, not a forecast; opportunity zone projects can lose money. The tool compares tax amounts only and does not discount for the benefit of paying the deferred tax later.
Deadlines to keep in mind
The 180-day clock starts on the day the gain would be recognized for federal tax purposes. Gains deferred under the old rules that have not yet been taxed are included for tax year 2026, so that bill arrives with the 2026 return. Investors report QOF holdings to the IRS each year on Form 8997.
Sources: 26 U.S.C. section 1400Z-2, as amended by Pub. L. 119-21 (Cornell Legal Information Institute); IRS, Opportunity Zones frequently asked questions; IRS Topic no. 409, Capital gains and losses. Last updated: October 2026.