The Wizard of O.Z.: Unlocking Wealth in McKinney’s Opportunity Zones
Courtney Leffall, CFP®
“Toto, we’re not in Kansas anymore.” We are in McKinney, Texas, the Emerald City where “O.Z.” stands for Opportunity Zones—a federal program that could lead investors to tax advantages while fueling local growth. As a fiduciary advisor in McKinney, I’m here to explain what these zones are, how they work, and why they might matter to you. With the city’s population surging past 214,000 and our very own Yellow Brick Road Project underway, the U.S. 380 Bypass, McKinney’s Opportunity Zones offer a unique angle for financial planning—especially on the East Side and near Downtown. Let’s dive in!
What Are Opportunity Zones?
Opportunity Zones, born from the 2017 Tax Cuts and Jobs Act, aim to spark investment in underserved areas like parts of McKinney. Texas has 628 of these designated census tracts, and McKinney’s include pockets poised for revitalization. Investors use Qualified Opportunity Funds (QOFs)—partnerships or corporations—to channel money into these zones. To qualify, a QOF files IRS Form 8996 and keeps 90% of its assets in Opportunity Zone property, such as new construction, major renovations (doubling a building’s basis within 30 months), or businesses earning at least half their income locally. The goal? Drive real economic progress.
The Tax Benefits of Opportunity Zones
Investing in a QOF offers three tax benefits, though you’ll want to consult your tax advisor to see how they apply to you:
Temporary Deferral of Capital Gains: Reinvest gains from a sale (stocks, property, etc.) into a QOF within 180 days, and you defer the tax until you sell the fund or December 31, 2026—whichever hits first. It’s a delay tactic for your tax bill.
Step-Up in Basis (Now Out of Reach): Previously, holding a QOF for five years bumped your basis by 10%, and seven years gave 15%, shrinking the taxable gain. But as of March 31, 2025, with less than two years to 2026, new investments can’t hit those marks unless the deadline shifts.
Permanent Exclusion of New Gains: Hold a QOF for 10 years, and any appreciation becomes tax-free—no federal capital gains tax on the growth. It’s a long-term play with a big payoff.
These perks depend on timing and rules, so your tax advisor can tailor the details to your situation.
McKinney’s Opportunity Zone Potential
McKinney’s Opportunity Zones shine on the East Side, where revitalization is underway—think hotspots like Tupps Brewery and Local Yocal adding flavor to the area. The U.S. 380 Bypass could boost connectivity, potentially lifting property values, while Highway 5 links this zone to Downtown McKinney’s vibrant core. With over 57,000 single-family homes and rising prices, the city’s growth (population 214,000+) fuels demand that aligns with Opportunity Zone goals. A QOF could fund a new East Side project—say, housing or a small business—letting you defer a gain and contribute to McKinney’s future.
Halfway down this yellow brick road, it’s clear: local knowledge matters. A financial advisor in McKinney can spot the best opportunities, whether near the 380 corridor or Downtown’s edge.
Why a Fiduciary Advisor Helps
Opportunity Zones come with complexity—90% asset tests, renovation deadlines, and market risks. A fiduciary advisor in McKinney, bound to act in your best interest, can guide you through. We’ll assess if a QOF fits your portfolio, vet deals for compliance, and leverage local insight—like how the 380 Bypass or East Side growth impacts value. It’s about aligning your investment with your broader financial picture, not chasing commissions.
Getting Started
Have capital gains from a recent sale? That’s your starting point. Consult your tax advisor to confirm tax implications, then connect with a fiduciary advisor in McKinney to explore QOF options—maybe one targeting the East Side or a broader Texas fund. It’s a strategic step, not a quick fix.
McKinney’s Opportunity Zones blend tax incentives with community impact, from the East Side’s revival to Downtown’s draw. So, follow the yellow brick road (Highway 380) to The Emerald City (Downtown McKinney), and meet with me—the Wizard of Opportunity Zone Funds—to pursue your financial goals together.
Disclosures:
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Investing involves risk including loss of principal. No strategy assures success or protects against loss.
