Opportunity Zones in 2025: The Clock is Ticking (and Resetting)

The Opportunity Zone (OZ) program has been one of the most powerful tax incentives in real estate history. But as we move through 2025, the landscape is shifting. With the original 2026 deferral deadline looming and new legislation extending the program, investors need to understand the new rules of engagement.

The 2026 Deferral Cliff

For investors who have already placed capital into Qualified Opportunity Funds (QOFs) or plan to do so before January 1, 2027, the rules remain tied to the original timeline.

• Deferral End Date: You must pay taxes on your deferred capital gains on December 31, 2026.
• Implication: If you invest today, you only get ~2 years of tax deferral. However, the primary benefit—tax-free appreciation on the new investment after 10 years—remains fully intact.

The New Era: Post-2027 Investments

Thanks to the "One Big Beautiful Bill Act" (OBBBA), the OZ program has been effectively made permanent with a new rolling structure for investments made on or after January 1, 2027.

NJ Strategy: Where to Invest?

New Jersey's 169 Opportunity Zones include some of the hottest development markets in the state. Smart money is focusing on:

• Journal Square (Jersey City): High-density residential towers.
• Newark (Downtown & Ironbound): Mixed-use and adaptive reuse.
• Camden: Leveraging the "stack" of OZs with ASPIRE and ERB funds.

The "Stacking" Advantage

The real power of OZs in New Jersey isn't just the federal tax break—it's the ability to layer it with state incentives. Since NJ conforms to the federal treatment, you get state tax deferral as well. Combine that with:

1. ASPIRE Tax Credits: For gap financing.
2. PILOT Agreements: For operating expense reduction.
3. UEZ Benefits: For sales tax exemptions on construction materials.