Intro
Brett Rentmeester, founder and managing director of Windrock Wealth Management, walks host Maggie Lake through the opportunity zone rules that become a permanent program in 2027, works a million-dollar stock gain through the arithmetic on both the deferral and the property, and explains what he thinks goes wrong when the tax benefit leads the investment decision.
Guest: Brett Rentmeester, founder and managing director of Windrock Wealth Management
Host: Maggie Lake
Published: 28 August 2026 on Wealthion
Watch on YouTube | 26 min
Key Takeaways
Opportunity zones stop being a one-off and become permanent in 2027
"this will now be a perpetual program starting in 2027" — Brett Rentmeester
The appreciation on a qualifying development comes out untaxed at year 10
"let's just say you develop an apartment building and you hold it for 10 years, all appreciation will be tax-free to you"
You have to build or substantially improve, not just buy the building
"You actually have to improve it. You have to basically double the cost basis."
Depreciation gets taken along the way and never picked back up at the sale
"So it's kind of another freebie in this—in this equation."
Rolling a gain in defers the tax five years and erases a tenth of it outright
"Another way to say that in layman's terms would be 10% of the gain you don't have to pay tax on at all."
Ten years of illiquidity is the price, and it rules most people out
"You're talking about tying your money up for 10 years and illiquid things."
On his worked example a million-dollar gain ends up behind a building with a gain of about 4 million
"Now that four million is totally tax-free to you under these current rules as long as it's held 10 years, at least 10 years."
The investment case has to stand on its own before the tax benefit is layered on
"All these tax benefits only work if they're layered on—on top of what's already a good investment"
He expects most of the coming deal set to be driven by tax rather than by economics
"maybe it'll be 10% of the opportunity set here, and the other 90%—80, 90%—will be driven by tax motivated investors"
Gains taken this fall already qualify through the 180-day rollover window
The program itself starts in 2027, but a 2026 gain can come off the 2026 return
The Age-Old Debate About Taking Gains
Lake opened on U.S. equities at or near record highs, with investors sitting on big gains and caught between taking money off the table and the tax that comes with it, and asked what he tells clients
Rentmeester called it the age-old debate people have when they have big gains: they know intuitively they should trim back and find it very hard to do
"It's very hard to pay the tax piper, so to speak."
He framed it as one of the good problems in investing that nonetheless causes an equal amount of stress
In a normal year-to-year context the tools are ordinary — an adviser taking tax losses in other positions, and managing timing from one year to the next
He says that only goes so far; a big concentrated gain or a business sale needs planning that is a little more sophisticated
The more sophisticated planning he wanted to talk about is the opportunity zone rules coming into effect in 2027
What an Opportunity Zone Is, and What Changes in 2027
The program started in 2018, when every state was allowed to designate zones — zip code districts that met rules on average income — where it wanted investment dollars to go
Investors could put money into businesses or real estate inside those zones, though real estate was the more common route
Hold the business or property for 10 years or more and the exit is untaxed: "they could exit that investment tax-free"
He was careful to say not all of the designated zip codes were terrible areas — they were areas that fell under certain rules states wanted more development dollars to reach
The 2018 version ends this year, and the rules have now been updated: "this will now be a perpetual program starting in 2027"
"it is one of the more powerful tax benefits we've seen" — Brett Rentmeester
Lake said this had only come to her attention recently, partly through talking to his team, and reached for the familiar comparison — muni bonds give a tax benefit for investing in local and state governments — describing this as a way to attract capital to places that were having a hard time
Not a Muni Bond: You Have to Build
Muni bonds pay federally tax-free income, he said, but the interest rate on them is pretty limited
"you're getting tax benefit, but on a expected lower return than certain things" — Brett Rentmeester
The first condition on the opportunity zone side is that you cannot simply buy an existing commercial property, office building or apartment and collect the benefits
"You actually have to improve it. You have to basically double the cost basis."
He said the amount put in has to be double what the property was, and noted there are different rules this time for rural developments, which are more included
The payoff on the property is that the appreciation is never taxed: "let's just say you develop an apartment building and you hold it for 10 years, all appreciation will be tax-free to you"
Like the muni bond the gain is tax-free, but he said the expectation for larger percentage gains is different from the muni bond expectation
The Depreciation You Never Have to Pick Back Up
He walked through depreciation for the audience: an investor slowly writes off the value of a property over the years of ownership, excluding the land, and anyone who has owned a rental home would know it
On a normal apartment building, he said, "maybe you can depreciate 80% of the property slowly over the course of the next 20 years"
In ordinary real estate the deduction lands today against ordinary income at the higher rates, and has to be picked back up as income at a lower rate when the property is sold
He described that as a bit of a rate arbitrage plus a time value of money benefit, because you got the benefit now instead of in the future
Inside an opportunity zone the back-end pickup goes away: "you get the depreciation deduction against ordinary income along the way but at the back end you don't need to pick any of that up"
"So it's kind of another freebie in this—in this equation."
Rolling a Gain In: Five Years of Deferral and 10% Off the Tax
Separate from the investment itself is how it gets funded — money that came out of capital gains rather than cash from a bank account
Roll gains in and the tax that would have been owed is deferred for up to five years
On top of the deferral there is what he called a step up in basis of 10%
"Another way to say that in layman's terms would be 10% of the gain you don't have to pay tax on at all."
The remainder is payable over the following five years, which is the whole point of the structure on the funding side
The Cost Is Ten Years of Illiquidity
Before the worked example he went back to the negatives, saying Windrock has done a number of these over the years and plans to do more because the tax benefits are very advantageous
"You're talking about tying your money up for 10 years and illiquid things."
"This works best for a true multi-generational kind of wealth family."
His picture of the right client is someone selling a business who does not need the money, is thinking about the next generation, and can park it away for 10 plus years
For a common average person with some gains it may be tax attractive, he said, but set against what has to be tied up and for how long, it may not be
Lake put the timeframe bluntly: "Don't tie it up if you're going to need to draw."
"That should be the mindset at least. That should be the mindset." — Brett Rentmeester
Where It Fits: Business Sales, Sudden Wealth and the Next Generation
Lake raised the case of someone who came into sudden wealth young as another possible fit, since that money presumably would not be needed for 10 years
"If you're in that lucky position, this might also be something that you can at least think about" — Maggie Lake
Rentmeester said the source is dynamic — it is any capital gains
His list: gains from selling a real estate property, from selling stock, from selling cryptocurrencies, or from selling an operating business, which is what a lot of families go through
Lake added that someone in the next generation walking into an inheritance should make sure this is part of the conversation they have with an adviser
"the tax advantages are pretty tremendous for the right fact pattern"
He repeated that not everybody is going to have the right fact pattern, and said what matters is that people have it on their radar and understand the basics well enough to work out whether they do
The Worked Example, Part One: What the Deferred Tax Buys
The setup is a stock sale producing a million dollar capital gain for a taxpayer in the highest bracket; setting state taxes aside and simplifying, a 20% long-term capital gain rate means $200,000 owed
Move that million of gain into an opportunity zone instead and the tax is still owed, but not for five years — and 10% of it goes away, so $20,000 of the $200,000 disappears provided the investment is held at least five years
He asked the audience to treat the money as fungible: the roughly $200,000 that would have gone to the tax authorities today is invested instead
Assuming 10% a year, that is $20,000 a year over five years: "100—$100,000 plus the 20 you shaved off of the step up in basis" — Brett Rentmeester
"So you've got $120,000 that you wouldn't have had you just paid the tax"
On his numbers the bill at the end is $180,000 rather than $200,000, with the earnings on the deferred money sitting alongside it
"the point is it gives you your use of your tax money for five more years"
He allowed that someone could outperform his assumption and the numbers would be even more compelling, and said most smart people over a five-year horizon can probably come up with a pretty good outcome
The Worked Example, Part Two: A $1 Million Check and a $4 Million Tax-Free Gain
Most people do not buy commercial real estate — an office building, a hospital, a medical center, apartments — all cash, because of the dollars involved; they use debt
A million dollars of equity at 40% of the value implies about a million and a half of borrowing, by the investor or the company they are working with, so the million-dollar check sits behind a property worth $2.5 million
Writing off 80% of that building over time is about $2 million of depreciation; applying about a 40% marginal tax rate, which he called roughly the highest federal rate, he put the benefit at about $800,000 taken along the way
On appreciation he was explicit that nobody knows what a property will do: "I'm going to assume just a 10% over the course of 10 years"
On that assumption the building is worth 6 and a half million by the end of 10 years
Repaying the million and a half of debt takes it to five million, and a million of that was the investor's original money, so the gain is about 4 million
"Now that four million is totally tax-free to you under these current rules as long as it's held 10 years, at least 10 years."
He said it can be held up to 30 years for some extra benefit, and that "it becomes kind of a tax-free asset, which you don't get many of these under the tax code"
Whether the First Round Worked, and Which Businesses Qualify
Lake reasoned that the extension implies the program was successful, on the opportunity zone side as well as the investor side
He agreed, saying it brings investment dollars to areas investors would normally shy away from and becomes much more attractive with the tax benefits, and that he thinks the states like it
Operating businesses can qualify in these regions too, but he said it is a little more tricky — the business has to be there, and most of its revenue has to come from there
His examples of businesses that clear that bar: a fast food restaurant or a car wash, where all the revenue comes from that little area
Real estate has been the big play, and the new rules push harder at rural development, with extra benefits where a project is considered rural
The Investment Has to Come First, and the Late-'80s Precedent
Lake asked whether it can fail, given the appreciation assumptions in the math, and how he decides as an adviser which projects look good
He said you have to find good sponsors or good operators with projects that make sense, and called her question maybe the most important point
"the investment decision always has to come first"
"All these tax benefits only work if they're layered on—on top of what's already a good investment"
He reached back to the late '80s, when some of the tax rules incented people to do a lot of real estate deals that did not make sense
"ultimately I think it culminated with the savings and loan crisis"
He said he expects a lot of people to chase bad deals and things that look good on paper because of the tax benefits, where the economics of the project itself do not pan out
Get the project and the area right, layer the benefits on, and "that's where you turn a good investment into a great investment. But it is buyer beware."
Lake put the stigma question to him — that if a project cannot get capital from the market, something must be wrong with it — and answered it herself as probably oversimplifying, pointing to situations where a third party sits in the middle as risk mitigation, and noting that capital is being siphoned off into AI projects, which makes it hard to compete for money
Where the Maps Stand, and What He Expects the Deal Set to Look Like
The zones are determined state by state and the districts are being worked out now; he said Arizona already has a lot of its districts mapped out, others are not known yet, and states have until mid to late fall
Pointing back to the earlier round of zones, he said "there were huge areas in downtown cities that qualified" — a huge opportunity, because there is activity in cities
Some zones will stay unattractive even with the tax benefit, and what decides it is the zone and the kind of real estate: people have to want to live in the apartment building, while a medical building might pull people in from surrounding zip codes
"So really the devil is in the details."
He expects both single-project deals — this apartment, this medical center — and funds that diversify across a basket of properties, maybe even across states
Last time, in his firm's experience, there were some good projects, but a lot of people put funds together because of the tax benefits, knowing investors' main objective was just to defer taxes and have a tax outcome
"maybe it'll be 10% of the opportunity set here, and the other 90%—80, 90%—will be driven by tax motivated investors" — Brett Rentmeester, who added that this can often push you in a bad direction
Not a Do-It-Yourself Project, and the Window That Is Already Open
Lake said the complexity answered her final question: she is all for the DIYers, but "just simply sticking it into Google, looking for an opportunity zone near you may not be the best path"
He agreed, saying that even after trying to simplify the discussion it is still clear there are a lot of moving pieces, and that the law is complicated
The execution risk sits with the operator and the structure: "one slip up and it might disqualify itself from all these tax advantages"
He said the operators and the structure of the opportunity zone have to be doing everything by the book with the right accountants
Investors, he said, really need to work with the right crew to find qualified opportunity zones and make sure it is a fit for their fact pattern
Lake expects operators who have done this to develop a track record of success in the area, and said she likes the idea that done right it gets needed capital to places while giving investors a benefit
His last point was that the clock is already running: "any capital gains that are happening now in the fall of 2026 qualify to be rolled into an opportunity zone in '27, and take that capital gain off your 2026 tax return"
The rollover has to be done within 180 days, and he said investors should at least have that in mind as they head into the end of the year
Rentmeester's bottom line is that the rules can turn a large taxable gain into a tax-free asset for a family that can leave the money alone for a decade, but that the tax benefit is only ever a layer on top of a project that was worth owning anyway.
Products, Companies & Tools Mentioned
Windrock Wealth Management (Rentmeester's firm; he says it has done a number of opportunity zone deals over the years and plans to do more because the tax benefits are very advantageous)
Municipal bonds (The comparison Lake reached for — federally tax-free income, but on what Rentmeester calls "a expected lower return than certain things")
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