Gains that qualify
The rule covers gain that would be treated as capital gain for federal tax purposes (IRC §1400Z-2(a)). In practice, that includes gains from selling:
- stocks, bonds, and mutual funds,
- a business or your share of one,
- investment real estate,
- cryptocurrency,
- art, coins, and other collectibles.
Ashley makes the point often, because people assume the program is only for real estate: "It's actually for a business sale, a stock position, crypto. Almost any appreciated asset can go into an opportunity zone." What goes in is the gain from that sale.
Short-term and long-term gains both count. Section 1231 gains, which come from selling property used in a business, count too, generally measured sale by sale.
What does not qualify
Ordinary income does not qualify. That means wages, bonuses, interest, and business profits. Depreciation recapture on equipment is generally taxed as ordinary income, so that part of a gain usually does not qualify either.
The sale also has to be to an unrelated party. If you sell to a family member or to a company you control, the gain may not be eligible. Ask your tax preparer to confirm before you count on it.
One more 2026 rule: the deferred gain that comes due on December 31, 2026 from an original Opportunity Zone investment cannot be rolled into a new Opportunity Zone investment, under the rules Notice 2026-40 says the IRS intends to propose. These rules come from IRS Notice 2026-40, which describes regulations the IRS plans to propose. Confirm the current status with your advisor before acting.
Common situations we see
- Selling a company: the gain on the shares or the business assets is usually capital gain or Section 1231 gain. Payments for a noncompete or consulting deal are ordinary income and do not qualify.
- Selling a rental property: the gain generally qualifies, except the part taxed as recapture at ordinary rates. Your CPA can split the two.
- Selling stock options or restricted stock: the part taxed as wages does not qualify. Gain after that, when you sell the shares, usually does.
- Crypto: trades and sales at a gain generally qualify, because crypto is treated as property for federal tax purposes.
Gains that come through a K-1
If you own part of a partnership or S corporation and it sells an asset at a gain, the gain passes through to you on a K-1. You can invest your share yourself, or the entity can invest at its level. Your 180 days can start on a few different dates, which often gives you extra time. See our answer on the 180-day rule for the details.
Only the gain gets the benefit
You do not need to reinvest the full sale price. Say you sold stock for $1.5 million that you bought for $500,000. Your gain is $1 million. You can invest that $1 million and keep the $500,000. If you invest more than the gain, the extra money is treated like a normal investment with no Opportunity Zone benefits. As Ashley puts it, "Anything that's non-capital gains comes in as non-qualifying."
You can also invest just part of the gain. The rest is taxed as usual.
What to do next
Gather your closing statement or brokerage confirmation and the date of the sale. Ask your CPA to confirm the gain is capital gain and how much of it is recapture. Then line up your 180-day deadline. If you want help sorting it out, book a free 15-minute call.