What if a capital gain could be deferred for five years, partly discounted, and then everything it grows into came back to you tax free?

Opportunity Zones started under the 2017 Tax Cuts and Jobs Act to push private investment into underserved communities. The One Big Beautiful Bill Act made them permanent and created a new generation of zones starting in 2027. In Part 2 of her conversation with Todd Lofgren of Alternative Tax Management, Heidi Henderson walks through what Opportunity Zones 2.0 actually changes and who it makes sense for.

The original program had one fixed deferral date. The new version rolls. Every investment gets its own five year deferral, a 10% step up in basis if held five years, and 30% if the project sits in a rural zone, which now includes farms, ranches, and agricultural land. Hold for 10 years and the growth can be sold with no tax owed. That is why the industry calls a QOZ a Roth IRA for capital gains.

Heidi also raises a difference she says nobody talks about. In a 1031 exchange, every dollar of proceeds has to roll into the next property. With a QOZ, you only reinvest the gain and you keep the rest. For investors who want out of real estate entirely, it works as a second exit after the DST strategy covered in Part 1.

Todd covers what qualifies as a gain, why you have 180 days to invest it, and how some funds return capital at year five to help cover the tax bill when the deferred gain comes due. He explains why a gain triggered in the second half of 2026 can end up with close to six years of deferral, and why his team only brings on funds with a track record through multiple economic cycles.

Both of them keep coming back to the same rule. Investment first, tax benefit second. A great tax incentive does not make a bad investment good.

KEY TOPICS
What an Opportunity Zone is and how each governor picks the tracts | The $160 billion invested since 2017 and what it did to household income and unemployment | Why the zones are now permanent and what is still unknown about the new tracts | The rolling five year deferral under QOZ 2.0 | The 10% step up in basis, and 30% for rural zones | Why a QOZ behaves like a Roth IRA for capital gains | QOZ 1.0 vs QOZ 2.0 | Why only the gain is reinvested, not the full sale price | 1031 exchange vs Opportunity Zone | Stock, crypto, art, and business sales as qualifying gains | The 180 day investment window | How some funds help investors pay the tax at year five through energy and real estate refinancing | Why business QOZs are rare and most funds are run by developers | Only investing what you can leave alone for 10 years | The biggest mistake: chasing the tax break without vetting the investment

ABOUT TODD LOFGREN
Todd Lofgren has over 25 years of experience in the financial services industry working with institutional asset managers, providing investment solutions to financial advisors and CPAs. He uses his diverse background to partner with advisors, accounting professionals, and others to deliver tax advantaged solutions for high net worth clients and small business owners. Todd lives in Berwyn, Pennsylvania with his wife Lianne and their three children, and in his free time enjoys tennis, pickleball, golf, and live music.

CONNECT WITH TODD LOFGREN & ALTERNATIVE TAX MANAGEMENT
Website: https://www.alternativetaxmanagement.com/
LinkedIn: https://www.linkedin.com/in/todd-lofgren-awm/
Email: [email protected]

Resources:
Get A Free Cost Segregation Benefit Analysis Here:
https://portal.engineeredtaxservices.com/get-started?ref_id=njg2zdv

IRS Audit Technique Guidelines:
https://www.irs.gov/pub/irs-pdf/p5653.pdf

Baselane Affiliate Link:
https://baselane.com/engineeredtaxservices

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Links:
LinkedIn – linkedin.com/in/heidihenderson
Instagram – instagram.com/slashtaxwithheidi
Facebook – facebook.com/slashtaxwithheidi
https://app.411core.com/r/XCB

LEARN MORE
Engineered Tax Services has helped investors and business owners unlock millions in tax savings for nearly 25 years through cost segregation, R&D credits, and energy incentives like 179D and 45L.
👉 Visit engineeredtaxservices.com

Qualified Opportunity Zone funds carry risk, fees, illiquidity, and strict compliance requirements. Any figures discussed are illustrative and not a guarantee of future results. Nothing in this episode is investment, tax, or legal advice. Evaluate any QOZ investment with a qualified tax, legal, and investment professional before acting.

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