Blake Christian, HCVT Tax Partner | Garrett Owens, HCVT Staff Accountant

September 2, 2025

The Federal Opportunity Zone (OZ) program allows taxpayers to defer a wide-variety of capital gain income and if timely reinvested into one of the over 8,700 low-income census tracts throughout the U.S. (and its Territories) taxpayer can obtain partial tax exemptions after a five-year hold, and complete federal exemption after a 10-year hold. 

The rules for reinvestment are very flexible and taxpayer friendly. Taxpayers with capital gains from partnerships and S Corporations (reported on a K-1) are allowed additional time to defer their capital gains by investing into an Opportunity Zone (OZ) Fund – including their own “captive” OZ Fund. Taxpayers can elect to start their 180-day reinvestment period as late as March 15^th of the year following the gain year provided the individual partner/ shareholder (vs. the entity that reported the gain) is making the OZ investment.

2025 presents a couple of unique situations that gives: i) all taxpayers with 2024 K-1-reported capital gains from calendar year-end entities a couple of extra days to make an OZ investment and ii) an extra 7 months to fund for taxpayers in Los Angeles County who were directly or indirectly impacted by the January 2025 Wildfires.

Due to the extenuating circumstances in the calendar-year 2025, the following nuances have been created for investors.

• 2024 OZ K-1 Capital Gains 180-Day Reinvestment Period Extended
  • For partnerships and S corporations, the tax filing deadline is typically March 15, unless that day falls on a weekend, then the due date automatically shifts to the next business day. In 2025 the deadline was March 17.
  • For OZ purposes, the 180-day clock starts on the actual due date, not the 15th, so for 2025 taxpayers have until September 12, 2025 (rather than September 10) to reinvest all or a portion of their calendar 2024 K-1 gains.
• Even More Time for OZ Funding for California Wildfire Victims
  • Due to the federal disaster in January 2025, the original tax filing deadline for California wildfire victims was moved (vs. extended) to October 15, 2025. That date also becomes the start of the 180-day OZ reinvestment window.
  • As a result, the new deadline for making OZ investments with 2024 K-1 gains is April 10, 2026 (the actual 180^th day falls on a Sunday, so the funding must be documented on or before the preceding business day, which is Friday April 10^th).

Summary

Taxpayers with large K-1 reported capital gains in calendar 2024 still have a huge window of opportunity to defer their 2024 gains until December 31, 2026 – and essentially get an interest-free loan through April 15, 2027 for federal purposes. California does not follow the federal OZ rules, so California taxpayers get no deferral on their state-level taxes.

If the tax return due date is moved because of a weekend or holiday, your 180-day OZ window starts on the actual due date, rather than the 15th. And if you’re in a federally declared disaster area, you get even more time to defer your taxes. 

Additional information regarding the OZ program and other tax saving opportunities can be found on our website here and here.

Tax regulations in this area can be complex and subject to updates. For the best advice tailored to your specific situation, please contact the HCVT OZ team with any questions.