Opportunity Zones - A New Landscape
U.S. Senate Passes Opportunity Zone 2.0 Legislation
On July 1, 2025, updates to federal Opportunity Zone legislation were adopted by the U.S. Senate, providing significant benefits for OZ investors.
Logan, Utah — July 2, 2025 — On July 1, 2025, the U.S. Senate passed H.R. 1 (the “One Big Beautiful Bill”), which aims to make Opportunity Zones permanent (“Opp. Zone 2.0”). The bill will now go back to the House for final approval before going to President Trump for execution. Key updates to Opp. Zone 2.0 legislation include the following:
Permanent Status. Opportunity Zone legislation was originally slated to sunset at the end of the 2026 calendar year. With the adoption of Opp. Zone 2.0, Opportunity Zone legislation will become a standing component of the Internal Revenue Code.
Rolling Deferral. Any qualifying gain invested into an OZ fund after December 31, 2026 will receive a five-year deferral.
New Step-up Schedule. Standard OZ fund investors will receive a ten percent (10%) basis step-up on their qualified gain after five years.
Rural Incentives. Rural OZ fund investors will receive a thirty percent (30%) basis step-up on their qualified gain after five years.
Zone Re-designations. Governors must select new zones (or re-certify existing zones) every ten years starting July 1, 2026.
Tighter Census Tracts. The “low-income community” threshold falls from eighty percent (80%) to seventy percent (70%) of area or statewide family income.
Expanded Reporting. Additional reporting and transparency measures kick in for tax years beginning in 2027.
The legislation also affirms that, upon holding an investment for at least 10 years, there will be a step-up in basis equal to the fair market value (with a caveat that if the investment is held for longer than 30 years, the fair market value on the 30th anniversary of the investment will be used for the step-up in basis).
Permanent status, a rolling deferral, and a new step-up schedule (particularly in rural areas) are significant new benefits for OZ investors that should serve to reinvigorate OZ investment. Combined with the step-up in basis to fair market value following a ten-year hold, Opp. Zone 2.0 provides powerful incentives for investors to find opportunities to contribute qualified gain dollars.
What does Opp. Zone 2.0 mean for Trivium and its existing and potential capital partners?
Trivium RE Group is currently developing a number of opportunity zone projects in Northern Utah, including Logan Gateway, River’s Edge, and Logan Station (Trivium’s “OZ Projects”).
The version of Opp. Zone 2.0 approved by the Senate is not retroactive, meaning there is no change for current OZ investments. If you have already placed qualified gain into an OZ Fund, the capital gains tax deferral will expire on December 31, 2026 and you will need to be prepared to make a tax payment in 2027.
While it is possible, we do not anticipate that the OZ tracts in which Trivium’s OZ Projects are located will be altered. If any of the applicable tracts are altered, previous investments will still receive the benefits of the original Opportunity Zone legislation. To avoid any risk associated with alterations to the applicable OZ tracts, an investor would need to be place any qualified gain into Trivium’s OZ Projects prior to December 31, 2026 (using the benefits of the original Opportunity Zone legislation).
Assuming no change in applicable OZ tracts, qualified gain invested in Trivium’s OZ Projects after December 31, 2026 will be eligible for a five-year deferral and minimum of ten percent (10%) basis step-up. Additionally, we anticipate that River’s Edge will qualify for Rural OZ investment (and it is possible that Logan Station and Logan Gateway will also qualify for Rural OZ investment). Therefore, qualified gain invested in River’s Edge (and potentially Logan Station and Logan Gateway) will receive a thirty percent (30%) basis step-up.
Do Trivium’s OZ Projects generate capital distributions in conjunction with the tax benefits of Opp. Zone 2.0?
Trivium’s OZ Projects are more than just a tax strategy. Each of Trivium’s OZ Projects are anticipated to generate at or above market returns, averaging annual cash-on-cash returns between 8%-10% of invested capital during the hold period without regard to any OZ tax benefit. Additionally, (a) capital distributions from operations are generally offset by cost-segregated depreciation and (b) any distribution of loan refinance proceeds are tax free. Because distribution of profits and other proceeds during the hold period are typically tax free and any liquidation following the hold period is tax free (based on the step-up to fair market value following the ten-year hold period), Trivium’s OZ Projects can be extraordinarily strong investments when considering post-tax returns.
How can you learn more about Trivium’s OZ Projects?
Click here to learn more about Trivium’s OZ Projects and how OZ investment could impact your investment profile.