IRS Opportunity Zones guidance makes investments in rural areas more attractive for real estate investors

Jan. 21, 2026

IRS guidance on Qualified Opportunity Zone (QOZ) investments in rural areas under the One, Big, Beautiful Bill clarifies the definition of “rural area” and the application of the substantial improvement threshold for certain improvements to property located in a QOZ comprised entirely of a rural area.

• A Rural area is any area other than a city or town with a population greater than 50,000, and any urbanized area contiguous and adjacent to a city or town with a population greater than 50,000.
• The substantial improvement threshold for required additions to the basis for property in these QOZs was reduced from 100% to 50%.