“To amend the Internal Revenue Code of 1986 to modify the rules for investments in qualified opportunity funds, and for other purposes.”
No CRS summary available for this bill.
This section extends the Qualified Opportunity Zone (QOZ) program—under which taxpayers may elect to defer capital gains by investing in qualified opportunity funds (QOFs) that hold QOZ property in designated economically distressed communities—by (1) extending QOZ designations through the 20th calendar year (from the 10th), (2) extending the gain deferral election period through December 31, 2036 (from December 31, 2026), and (3) setting the deferred gain inclusion date as December 31, 2026, for pre-enactment investments and December 31, 2036, for post-enactment investments made before January 1, 2037. The section further modifies basis increase rules for QOF investments holding residential rental projects by (1) conditioning the 5-year basis increase on at least 50% of occupied units being rented to individuals at or below 100% of area median income (AMI), adjusted for family size, as of the gain recognition date; (2) increasing the 5-year basis step-up to 15% (from 10%); and (3) increasing the 7-year basis step-up to 7% (from 5%). (Thus, these changes provide greater tax incentives for affordable housing investments in QOZs.) Finally, this section treats residential rental projects as QOZ property if they meet standard QOZ business property requirements and satisfy (1) at least 30% of occupied units rented to individuals at or below 100% AMI during substantially all of the QOF's holding period, (2) annual rent increases not exceeding 3%, and (3) 60-day advance notice of any rent increase; amendments generally apply on enactment, except the designation extension applies to designations in effect on enactment.