Qualified Opportunity Zone.
A definition, in plain English — with the books that teach it.
What it means
A Qualified Opportunity Zone (QOZ) is a designated low-income census tract where you can defer — and partially eliminate — capital gains tax by reinvesting gains into a Qualified Opportunity Fund within 180 days. If you hold the QOF investment 10+ years, the appreciation on the new investment is tax-free. The honest caveat: the underlying investments are illiquid and often speculative, so don't let the tax tail wag the dog.
Example
You sell stock with $200,000 of capital gains. Within 180 days you roll it into a QOF developing apartments in a QOZ. You defer the $200,000 gain until 2026 tax year. If you hold the QOF 10+ years and it grows to $500,000, the $300,000 of appreciation is federal tax-free.