The recently enacted legislation making the Opportunity Zone (OZ) program permanent also introduces a major new tool for rural development: Qualified Rural Opportunity Funds (QROFs).
QROFs are designed to channel investment into rural communities by offering enhanced tax incentives beyond those available through traditional OZ funds. The law also relaxes improvement rules for rural projects, making it easier for investors to qualify while lowering barriers for development in underserved areas.
Industry experts say the move could reshape the OZ landscape by steering more capital toward rural regions that have historically struggled to attract investment. Supporters argue that QROFs strike a balance between maintaining investor appeal and addressing the unique challenges of rural development.
With permanency secured and new rural incentives in place, stakeholders expect a surge of fund formations and rural project pipelines as the new rules take effect.
What Is a QROF?
•A Qualified Rural Opportunity Fund (QROF) functions like a traditional Qualified Opportunity Fund (QOF) but focuses exclusively on rural areas—defined as locations outside cities or towns with populations over 50,000 and not adjacent to urbanized areas.
•It must hold at least 90% of its assets in qualified opportunity zone (QOZ) property located entirely within rural-designated QOZs.
With permanency secured and new rural incentives in place, stakeholders expect a surge of fund formations and rural project pipelines as the new rules take effect on Jan. 1, 2027.
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