Published in The Legal Intelligencer and Law.com
In an article published on February 26 in The Legal Intelligencer and Law.com, VF Law Of Counsel Coni S. Rathbone discusses how the permanent Qualified Opportunity Zone (QOZ) framework under QOZ 2.0 reshapes long-term capital planning, enhances rural development incentives, and supports strategic incentive layering for developers, fund sponsors, and investors. The 2025 revisions have produced a rolling five-year deferral, with the gain being an automatic 10% basis step-up.
“In the Working Families Tax Cut Act (the act), the most impactful change is that the program is now permanent,” writes Rathbone. “This should no longer be viewed as a short term tax incentive, but instead as a rolling, ongoing investment tool to be considered when structuring a project.”
Rathbone emphasizes that tax advantages alone do not determine the success of a project and that unrealistic return projections and unreliable feasibility studies are common causes of failure in rural development. She further explains an often-overlooked point that most QOZ investments qualify as securities, meaning developers must account for compliance obligations to avoid significant risk.
“Because of lender reticence, rural projects and frankly, any QOZ project benefits can be most effective when paired with traditional economic development tools,” writes Rathbone. “Federal tax benefits may be layered with state and local programs that address infrastructure costs, construction financing gaps, and early operating expenses.”
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