Congress did not design the opportunity zone program, the cost segregation framework, and the qualified production property provisions to work together. But increasingly, real estate investors and their advisory teams are finding that they can, and the compounding effect is significant enough to change how deals get underwritten in 2026.
Each of these incentives operates independently. Stacked on a single acquisition, they create a level of tax efficiency that few investors are fully using, in part because the professionals who understand each program rarely sit in the same room.
The Mechanics of Stacking Two Incentives
Opportunity zones allow investors to defer capital gains by rolling proceeds from a prior asset sale into a qualifying investment. If the investor holds the investment for more than 10 years, they receive a step-up based on the opportunity zone asset itself, meaning the appreciation during the holding period may never be taxed.
Cost segregation operates on a different axis entirely. It accelerates depreciation by reclassifying components of a property, site improvements, removable flooring, decorative lighting, appliances, and other short-life assets from the standard 27.5- or 39-year depreciation schedule into 5-, 7-, or 15-year categories. With 100% bonus depreciation now permanent under the One Big Beautiful Bill, those reclassified assets can be fully depreciated in the year they are placed in service.
The combined effect: an investor defers capital gains on the front end through the opportunity zone, and then generates accelerated depreciation losses that offset other taxable income during the hold period.
Brian Kiczula, founder of cost segregation firm CostSegRx, describes the result as a double benefit. The investor defers capital gains through the opportunity zone on the front end, then accelerates depreciation on the property itself during the hold. “All of a sudden you’re getting double the benefit,” Kiczula says.
How Many Opportunity Zones Exist in the United States?
There are approximately 5,700 designated opportunity zones across the United States and its territories, including nearly all of Puerto Rico. The program, established under the Tax Cuts and Jobs Act in 2017, was designed to direct private capital into communities that had been historically underinvested, but its geographic range is broader than many investors assume.
Not all designated zones are in distressed urban areas. Some are in communities that need basic commercial infrastructure, a grocery store, a mixed-use development, or workforce housing. That geographic diversity means opportunity zone investments can include suburban infill projects, workforce housing, and light industrial facilities, depending on the census tract. “They’re not all in distressed areas,” Kiczula notes. “Congress wants people to invest in these spaces.”
A Third Layer: Qualified Production Property
The One Big Beautiful Bill introduced qualified production property provisions that go beyond standard cost segregation benefits. Investors who build facilities that convert raw materials into finished products, manufacturing plants, processing facilities, and assembly operations may be eligible to write off up to 100% of the designated structure and all related improvements, not just the short-life asset components.
This is a meaningful departure from traditional cost segregation, where the building structure itself (foundations, walls, roof) remains on a straight-line depreciation schedule regardless of how aggressively short-life assets are accelerated. Under the qualified production property provisions, the structure becomes eligible, too.
For investors targeting opportunity zones that support production or manufacturing use cases, the potential to layer all three incentives, capital gains deferral, accelerated depreciation on short-life assets, and full structural write-offs on qualifying production facilities, represents a compounding benefit that is still largely underutilized in the market.
Why Most Investors Hear About These Strategies in Isolation
The challenge is structural. CPAs tend to understand the opportunity zone mechanics. Cost segregation firms understand depreciation acceleration. Real estate brokers understand deal economics. But the conversation about how these incentives compound when layered on a single transaction rarely happens before the deal closes.
The investors capturing the full benefit are not necessarily finding better deals. They are running the same deals through more lenses before committing capital. Kiczula emphasizes the importance of assembling the right team early, from the CPA to the cost segregation specialist to the real estate broker, so that everyone is evaluating the same deal from their perspective before closing. “You really want to make sure you have a solid team in place,” he says.
About CostSegRx: CostSegRx delivers engineering-based cost segregation studies for commercial and residential real estate investors across the United States. The firm is led by Brian Kiczula, a member of the American Society of Cost Segregation Professionals with experience across property types ranging from single-family rentals to large hospitality and senior living facilities. For a complimentary estimate of benefit, visit costsegrx.com or call (888) 850-4155.
Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or investment advice. Tax laws and regulations are complex and subject to change, and eligibility for any incentive discussed, including opportunity zones, cost segregation, and qualified production property deductions, depends on individual facts and circumstances. Readers should consult a qualified CPA, tax advisor, or attorney before making decisions based on the strategies described.
