To amend the Internal Revenue Code of 1986 to modify the rules for investments in qualified opportunity funds, and for other purposes.
Summary
What This Bill Does
The bill extends the qualified opportunity zone framework. Zone designations may remain in effect through the twentieth rather than the tenth calendar year. The deadline for eligible qualified-opportunity-fund investment and deferred gain treatment moves from December 31, 2026 to December 31, 2036. Investments made before enactment retain the 2026 recognition date, while qualifying post-enactment investments made before 2037 use the 2036 date.
For a fund holding a residential rental project, an investor receives the referenced basis increase at gain recognition only if at least 50 percent of occupied units are occupied by households at or below 100 percent of area median income. The bill increases specified residential-project basis step-ups from 10 to 15 percent and from 5 to 7 percent.
A residential rental project qualifies as opportunity-zone property only if it otherwise meets the business-property definition, at least 30 percent of occupied units are occupied by households at or below 100 percent of area median income during substantially all of the fund's holding period, annual rent increases do not exceed 3 percent for any unit, and tenants receive at least 60 days' advance notice of a rent increase.
Most amendments take effect at enactment, and the designation extension applies to designations already in effect. The extension does not guarantee project eligibility or returns, and residential projects lose tax treatment if they fail the statutory occupancy, rent, notice, or property tests.
Who Benefits and How
Opportunity-fund investors and managers gain another decade for qualifying investment and deferral. Opportunity-zone communities may receive more capital. Residential developers that accept affordability and rent conditions receive enhanced basis increases. Moderate-income tenants gain reserved occupancy, a 3-percent rent-growth ceiling, and advance notice. Construction and property-management firms may gain project activity.
Who Bears the Burden and How
Federal capital-gains-tax receipts are deferred longer and reduced through larger basis adjustments. Residential funds and landlords must track tenant income, occupancy shares, holding-period compliance, every unit's rent increase, and notice timing. Projects seeking unrestricted rents or lacking enough qualifying tenants lose opportunity-zone treatment. IRS must administer separate dates for old and new investments and audit detailed housing conditions.
Key Provisions
- Extends zone designations from 10 to 20 calendar years.
- Extends qualifying investment and deferral through 2036.
- Preserves the 2026 recognition date for pre-enactment investments.
- Increases specified residential basis adjustments.
- Requires 50-percent qualifying occupancy for one investor basis increase.
- Requires 30-percent qualifying occupancy throughout the holding period.
- Limits annual rent increases to 3 percent per unit.
- Requires at least 60 days' rent-increase notice.
- Restricts tax treatment to otherwise qualifying zone property.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
Extends qualified opportunity zone designations and capital-gain deferral through 2036 while conditioning residential rental-project eligibility and investor basis increases on affordable occupancy, a 3-percent annual rent-increase cap, and 60-day rent-increase notice.
Key Policy Areas
Qualified Opportunity Zones, Capital Gains Deferral, Affordable Rental Housing, Community Investment, Rent Stabilization Conditions
Primary Purpose
Extends qualified opportunity zone designations and capital-gain deferral through 2036 while conditioning residential rental-project eligibility and investor basis increases on affordable occupancy, a 3-percent annual rent-increase cap, and 60-day rent-increase notice.
Policy Domains
Section 1 opportunity-zone extension and rental-housing conditions
Identified Gains
- Opportunity-fund investors receiving longer deferral
- Fund managers raising post-2026 capital
- Rental developers meeting affordability conditions
- Moderate-income tenants in qualifying projects
- Tenants protected by rent-increase limits
- Opportunity-zone communities receiving investment
- Construction firms building qualifying rentals
Identified Costs
- Federal capital-gains-tax accounts
- Residential funds tracking tenant income
- Landlords complying with rent caps
- Property managers issuing 60-day notices
- Projects failing affordable-occupancy tests
- IRS opportunity-zone audit staff
- Market-rate developers seeking unrestricted rents
Legislative Progress
In CommitteeIntroduced in House
Referred to the House Committee on Ways and Means.
Mrs. Cherfilus-McCormick introduced the following bill; which was referred to …
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Landlords complying with rent caps, Market-rate developers seeking unrestricted rents, Moderate-income tenants in qualifying projects
Positive-direction: Moderate-income tenants in qualifying projects, Rental developers meeting affordability conditions, Tenants protected by rent-increase limits
Negative-direction: Landlords complying with rent caps, Market-rate developers seeking unrestricted rents, Projects failing affordable-occupancy tests
Fund managers raising post-2026 capital, Opportunity-fund investors receiving longer deferral, Residential funds tracking tenant income
Positive-direction: Fund managers raising post-2026 capital, Opportunity-fund investors receiving longer deferral
Negative-direction: Residential funds tracking tenant income
Federal capital-gains-tax accounts, IRS opportunity-zone audit staff
Opportunity-zone communities receiving investment
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "fund"
- → Qualified opportunity fund holding residential property
- "tenant"
- → Resident of a qualifying rental project
- "investor"
- → Taxpayer investing in a qualified opportunity fund
- "developer"
- → Developer of opportunity-zone rental housing
- "administrator"
- → Secretary of the Treasury acting through IRS
Note: {'scope_ids': ['opportunity_zone_housing_extension'], 'description': 'The program extension is not unconditional for rental housing: tax treatment and basis increases depend on separate occupancy, income, rent, notice, and general opportunity-zone property tests, with different dates for old and new investments.'}
Key Definitions
Terms defined in this bill
The family-size-adjusted household-income ceiling used for both the 30-percent property test and 50-percent basis test.
An investment made after enactment and before 2037 with deferred gain recognized no later than December 31, 2036.
Opportunity-zone business property meeting 30-percent income-qualified occupancy, 3-percent rent-growth, and 60-day notice conditions.
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
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