Capital gains, reinvested with intention.

Eligible gains include short-term and long-term capital gains, as well as qualified Section 1231 gains, realized from the sale or exchange of any asset to an unrelated party. This encompasses gains from public equities, private business sales, real estate dispositions, digital assets, and passthrough entity distributions. Ordinary income is not eligible. The gain must be reinvested into a Qualified Opportunity Fund within 180 days of recognition.

The reinvestment clock generally begins on the date the gain would otherwise be recognized for federal income tax purposes. For partnership or S-corporation gains passed through to an investor, the window may instead begin on the last day of the entity's tax year, providing additional planning flexibility. Installment sales and certain passthrough structures have specialized timing rules. Zyyo's investment team coordinates directly with your tax advisor to confirm the applicable window.

OZ 1.0 refers to the original program established in 2017, which remains active for new investments through December 31, 2026. OZ 2.0, enacted under the One Big Beautiful Bill Act, takes effect January 1, 2027 and makes the program permanent. Under OZ 2.0, the deferral period becomes a rolling five years from investment, a ten percent basis step-up applies at year five, and rural Qualified Opportunity Funds receive an enhanced thirty percent step-up. The ten-year permanent exclusion benefit continues under both regimes.

For a property acquired by a Qualified Opportunity Fund to be deemed qualifying, the fund must either put the property to original use or substantially improve it. Substantial improvement means that, within a 30-month period, the fund's additions to basis must exceed the property's adjusted basis at acquisition, effectively doubling the investment. OBBBA introduced a lower threshold for properties in rural zones. Zyyo's ground-up and heavy-repositioning project pipeline is structurally aligned with this requirement.

Investment in Zyyo's Qualified Opportunity Funds is available to accredited investors as defined under Rule 501 of Regulation D, and certain vehicles may be structured for qualified purchasers under Section 2(a)(51) of the Investment Company Act. Individuals, trusts, family offices, and institutional vehicles are all eligible structures. Nonresident aliens and foreign corporations may also elect deferral on qualifying U.S. source gains, subject to applicable treaty and FIRPTA considerations.

Investors claiming deferral must file IRS Form 8949 in the year of investment and IRS Form 8997 annually for the duration of the QOF holding. OBBBA introduced expanded reporting obligations for Qualified Opportunity Funds themselves, including disclosure of property types, residential unit counts, employment figures, and tract-level deployment data. Zyyo's investor portal generates the required documentation and coordinates with your tax advisor at each filing cycle.

An exit prior to the ten-year hold results in recognition of the originally deferred gain and forfeiture of the permanent exclusion benefit on QOF appreciation. The basis step-up benefit may be partially retained depending on the holding period achieved. The program is structured to reward patient capital, and Zyyo's development horizons are deliberately aligned with the ten-year timeframe to keep investor incentives matched with project fundamentals.

Minimum investment thresholds vary by fund and offering. Specifics are disclosed in each fund's private placement memorandum and confirmed during the diligence phase of the investor journey. Zyyo's concierge team works with prospective investors to identify the most appropriate vehicle given gain size, liquidity preferences, and diversification objectives.