--- title: Can Banks Use Opportunity Zones? description: Can banks use opportunity zones? Five years ago, the answer would have been, “not a chance.” However, restrictions on what banking institutions can and cannot invest in have been relaxed. image: https://www.realized1031.com/hubfs/iStock-1008926982.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # Can Banks Use Opportunity Zones? Posted Aug 11, 2021 ![iStock-1008926982](https://www.realized1031.com/hs-fs/hubfs/iStock-1008926982.jpg?width=1366&name=iStock-1008926982.jpg) Mention the term “opportunity zone,” and what might come to mind are “capital gains,” “investors,” and “tax deferral.” Basically, entities can invest capital gains from the sale of assets into Qualified Opportunity Funds (QOFs) to defer any taxes on those profits.  Corporations can be set up for this very purpose. But, can banks use opportunity zones? If this question had been asked about five years ago, the answer would have been, “not a chance.” But in recent years, restrictions on what banking institutions can and cannot invest in have been relaxed somewhat. So, the short answer is yes. Nowadays, banks can invest in Qualified Opportunity Zones (QOZs).   Though banking institutions might have permission to make such investments, not all are going to immediately jump into the QOZ pool. ### A Brief History: Speculation, Limits, and Easing While many causes led to the financial collapse of 2008, one that had a great deal of focus involved reckless speculative investments made by banking institutions. To deal with this, various entities researched ways to help curtail such investments. The upshot was the [Volcker Rule](https://www.federalreserve.gov/supervisionreg/volcker-rule.htm), outlined in Section 619 of the Wall Street Reform and Consumer Protection Act of 2010, better known as the Dodd-Frank act. Named after economist and former Federal Reserve chair Paul Volcker, the Volcker Rule prohibited banks and similar entities from investing in, or sponsoring hedge funds or private equity funds, especially with the use of their own capital. As time went on, some of the restrictions eased. In the middle of 2020, the five financial regulatory agencies (Office of the Comptroller of the Currency; Federal Reserve Board of Governors; Federal Deposit Insurance Corporation; Securities and Exchange Commission and Commodity Futures Trading) [adopted amendments](https://www.novoco.com/sites/default/files/atoms/files/oz_joint_final_rule_062520.pdf) to the Volcker Rule. This action gave “banking entity or nonbank financial company . . . .” permission to “have certain interest in, or relationship with, a hedge fund or private equity fund . . .” or covered funds. QOFs fall under the category of covered funds. This means national banks and federal savings associations can make tax-advantaged investments in Qualified Opportunity Funds.   ### Banking Roles and QOZs According to the [Office of the Comptroller of the Currency](https://www.occ.gov/publications-and-resources/publications/community-affairs/community-developments-investments/jan-2021/cdi-jan-2021-article-2.html), banks can use their QOF investments to receive Community Reinvestment Act credit. When it comes to working with QOFs, banking institutions can also take on the following roles: **Brokers**. Banks can broker Opportunity Zone transactions by working with community organizations to help attract investors into the mix. **Lenders**. While loans aren’t eligible for the opportunity zone tax incentives, commercial real estate loans, construction loans, and bridge loans can be used to help fund ground-up construction and renovation. Under certain situations, such loans could be eligible for Community Reinvestment Act (CRA) consideration. **Fund managers**. Banking institutions can be general partners or managing members of a QOF that either manages the institutions’ investments or from other, third-party investors.    ### Will Banks Be Interested? The issue to consider here is that, while banks can now work with Qualified Opportunity Zones, not all will immediately jump in to do so. CPA specialist John Sciaretti with Novogradac & Co. noted that, for one thing, banking strategy might not immediately point in the direction of QOZs, and “ . . . they often don’t typically have the kind of supply of capital gains you would need to implement it,” [he told Millionacres](https://www.millionacres.com/taxes/articles/banks-get-green-light-opportunity-zone-investing/). Jim White with Post Harvest Technologies and the PHT Opportunity Fund also indicated that the size of the institution might influence QOF investments. He explained to Millionacres that smaller and regional banks will more likely invest in local Qualified Opportunity Funds. National banks, however, might target an industry, based on asset class. Finally, J. Kemper Patton, in a [scholarly article](https://scholarship.law.unc.edu/cgi/viewcontent.cgi?article=1510&context=ncbi) issued by the North Carolina Banking Institute/UNC School of Law, pointed out that the “. . . lack of transparency . . . , large scale investment requirements, and limited amount of time (left in the program) all could serve as issues for banks, both large and small.” Furthermore, the sheer amount of regulations involved with QOF investing could make it difficult for banks to participate. The upshot here is that, while banking institutions can now participate in the Qualified Opportunity Zone program, whether they do so or not remains to be seen.  There are material risks associated with investing in QOZ properties and real estate securities including liquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Costs associated with the transaction may impact investors’ returns, and may outweigh the tax benefits. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation. This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice, meeting the particular investment needs of any investor. Download The Guide To Opportunity Zones [![Download The Guidebook to QOZ's](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/QOZ-eBook-250.png?width=250&height=250&name=QOZ-eBook-250.png "Learn More About Qualified ...") ](https://www.realized1031.com/blog/can-banks-use-opportunity-zones#blogform) Download eBook ---   --- ### Download The Guidebook to QOZ's ![Download The Guide To Opportunity Zones](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/QOZ-eBook-550.jpg?width=550&height=650&name=QOZ-eBook-550.jpg) Learn More About Qualified Opportunity Zones Investments. By providing your email and phone number, you are opting to receive communications from Realized. If you receive a text message and choose to stop receiving further messages, reply STOP to immediately unsubscribe. Msg & Data rates may apply. To manage receiving emails from Realized visit the Manage Preferences link in any email received. Search ### [Why Realized](https://www.realized1031.com/why-realized) - [Wealth Management](https://www.realized1031.com/the-wealth-management-gap) - [Why Realized](https://www.realized1031.com/why-realized) - [Our Process](https://www.realized1031.com/how-realized-works) - [Scenarios](https://www.realized1031.com/scenarios) - [Private Client Program](https://www.realized1031.com/private-client) - [Realized Exchange Services](https://www.realized1031.com/realized-exchange-services) ### [The Company](https://www.realized1031.com/about-us) - [The Team](https://www.realized1031.com/about-us) - [FAQ](https://www.realized1031.com/frequently-asked-questions) - [Testimonials](https://www.realized1031.com/testimonials) - [Press](https://www.realized1031.com/press) - [Careers](https://www.realized1031.com/careers) ### [Partners](https://www.realized1031.com/partners) - [Financial Advisors](https://www.realized1031.com/advisor) - [Broker Dealers](https://www.realized1031.com/partners/broker-dealers) - [Real Estate Agents](https://www.realized1031.com/partners/real-estate-agents) - [Certified Public Accountants](https://www.realized1031.com/partners/certified-public-accountants) ### [Resources](https://www.realized1031.com/resources) - #### Learn - [Articles](https://www.realized1031.com/blog) - [Glossary of Terms](https://www.realized1031.com/glossary) - [Capital Gains Tax Rates](https://www.realized1031.com/capital-gains-tax-rate) - #### Watch - [Video Library](https://www.realized1031.com/videos) - [Webinar Archive](https://www.realized1031.com/webinars) - #### Read - [Delaware Statutory Trust](https://www.realized1031.com/delaware-statutory-trust) - [Tenants-In-Common](https://www.realized1031.com/tenants-in-common-tic) - [1031 Exchange](https://www.realized1031.com/1031-exchange) - [Qualified Intermediary](https://www.realized1031.com/qualified-intermediary) - [Qualified Opportunity Zones](https://www.realized1031.com/opportunity-zones) #### Realized - 500 W 13th Street Austin, TX 78701 - (877) 797-1031 ##### [Contact Us](https://www.realized1031.com/contact-us) - [![Realized on Facebook](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-facebook-whiterev.png?width=60&height=60&name=social-facebook-whiterev.png)](https://www.facebook.com/Realized/) - [![Realized on LinkedIn](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-linkedin-whiterev.png?width=60&height=60&name=social-linkedin-whiterev.png)](https://www.linkedin.com/company/realized/) - [![Realized on YouTube](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-youtube-whiterev.png?width=60&height=60&name=social-youtube-whiterev.png)](https://www.youtube.com/c/Realized1031?sub_confirmation=1) - [![Realized Holdings, Inc. BBB Business Review](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/bbb/RZH2-bbb-seal.png?width=40&height=65&name=RZH2-bbb-seal.png)](http://www.bbb.org/central-texas/business-reviews/real-estate-investors/realized-holdings-llc-in-austin-tx-1000112948/#bbbonlineclick) - [![FEA Logo](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/fea/RZH2-fea-logo.png?width=82&height=65&name=RZH2-fea-logo.png "FEA Logo")](https://www.1031.org) SECURITIES DISCLOSURE Realized1031.com is a website operated by Realized Technologies, LLC, a wholly owned subsidiary of Realized Holdings, Inc. (“Realized Holdings”). Securities and/or Investment Advisory Services may be offered through Registered Representatives or Investment Advisor Representatives of Realized Financial, Inc. ("Realized"), a broker/dealer, member [FINRA](https://www.finra.org)/[SIPC](https://www.sipc.org/), and registered investment adviser. Realized is a subsidiary of Realized Holdings, Inc. ("Realized Holdings"). Check the background of this firm on [FINRA's BrokerCheck](https://brokercheck.finra.org/firm/summary/22333). Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment. Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested. This site is published for residents of the United States who are accredited investors only. Registered Representatives and Investment Advisor Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of services referenced on this site are available in every state and through every representative listed. For additional information, please contact the Realized Compliance department at 512-472-7171 or info@realized1031.com. - [Terms & Conditions](https://www.realized1031.com/terms-and-conditions) - [Privacy Policy](https://www.realized1031.com/privacy-policy) - [Form CRS](https://www.realized1031.com/hubfs/common-files/disclosures/FormCRS.pdf) - [ADV 2A](https://www.realized1031.com/hubfs/common-files/disclosures/ADV2A.pdf) - [Reg BI Disclosures](https://www.realized1031.com/hubfs/common-files/disclosures/RegBI.pdf) -   © 2026 Realized Holdings, Inc. ```json { "@context" : "http://schema.org/", "@type" : "BlogPosting", "articleBody" : "Mention the term “opportunity zone,” and what might come to mind are “capital gains,” “investors,” and “tax deferral.” Basically, entities can invest capital gains from the sale of assets into Qualified Opportunity Funds (QOFs) to defer any taxes on those profits. Corporations can be set up for this very purpose. But, can banks use opportunity zones? If this question had been asked about five years ago, the answer would have been, “not a chance.” But in recent years, restrictions on what banking institutions can and cannot invest in have been relaxed somewhat. So, the short answer is yes. Nowadays, banks can invest in Qualified Opportunity Zones (QOZs). Though banking institutions might have permission to make such investments, not all are going to immediately jump into the QOZ pool. A Brief History: Speculation, Limits, and Easing While many causes led to the financial collapse of 2008, one that had a great deal of focus involved reckless speculative investments made by banking institutions. To deal with this, various entities researched ways to help curtail such investments. The upshot was the Volcker Rule, outlined in Section 619 of the Wall Street Reform and Consumer Protection Act of 2010, better known as the Dodd-Frank act. Named after economist and former Federal Reserve chair Paul Volcker, the Volcker Rule prohibited banks and similar entities from investing in, or sponsoring hedge funds or private equity funds, especially with the use of their own capital. As time went on, some of the restrictions eased. In the middle of 2020, the five financial regulatory agencies (Office of the Comptroller of the Currency; Federal Reserve Board of Governors; Federal Deposit Insurance Corporation; Securities and Exchange Commission and Commodity Futures Trading) adopted amendments to the Volcker Rule. This action gave “banking entity or nonbank financial company . . . .” permission to “have certain interest in, or relationship with, a hedge fund or private equity fund . . .” or covered funds. QOFs fall under the category of covered funds. This means national banks and federal savings associations can make tax-advantaged investments in Qualified Opportunity Funds. Banking Roles and QOZs According to the Office of the Comptroller of the Currency, banks can use their QOF investments to receive Community Reinvestment Act credit. When it comes to working with QOFs, banking institutions can also take on the following roles: Brokers. Banks can broker Opportunity Zone transactions by working with community organizations to help attract investors into the mix. Lenders. While loans aren’t eligible for the opportunity zone tax incentives, commercial real estate loans, construction loans, and bridge loans can be used to help fund ground-up construction and renovation. Under certain situations, such loans could be eligible for Community Reinvestment Act (CRA) consideration. Fund managers. Banking institutions can be general partners or managing members of a QOF that either manages the institutions’ investments or from other, third-party investors. Will Banks Be Interested? The issue to consider here is that, while banks can now work with Qualified Opportunity Zones, not all will immediately jump in to do so. CPA specialist John Sciaretti with Novogradac & Co. noted that, for one thing, banking strategy might not immediately point in the direction of QOZs, and “ . . . they often don’t typically have the kind of supply of capital gains you would need to implement it,” he told Millionacres. Jim White with Post Harvest Technologies and the PHT Opportunity Fund also indicated that the size of the institution might influence QOF investments. He explained to Millionacres that smaller and regional banks will more likely invest in local Qualified Opportunity Funds. National banks, however, might target an industry, based on asset class. Finally, J. Kemper Patton, in a scholarly article issued by the North Carolina Banking Institute/UNC School of Law, pointed out that the “. . . lack of transparency . . . , large scale investment requirements, and limited amount of time (left in the program) all could serve as issues for banks, both large and small.” Furthermore, the sheer amount of regulations involved with QOF investing could make it difficult for banks to participate. The upshot here is that, while banking institutions can now participate in the Qualified Opportunity Zone program, whether they do so or not remains to be seen. There are material risks associated with investing in QOZ properties and real estate securities including liquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Costs associated with the transaction may impact investors’ returns, and may outweigh the tax benefits. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation. This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice, meeting the particular investment needs of any investor.", "articleSection" : [ "Qualified Opportunity Zones" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2021-08-12T00:00:03+0000", "datePublished" : "2021-08-12T00:00:02+0000", "description" : "Can banks use opportunity zones? Five years ago, the answer would have been, “not a chance.” However, restrictions on what banking institutions can and cannot invest in have been relaxed.", "headline" : "Can Banks Use Opportunity Zones?", "image" : { "@type" : "ImageObject", "height" : 768, "url" : "https://f.hubspotusercontent10.net/hubfs/733513/iStock-1008926982.jpg", "width" : 1366 }, "mainEntityOfPage" : "https://www.realized1031.com/blog/can-banks-use-opportunity-zones", "name" : "Can Banks Use Opportunity Zones?", "publisher" : { "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "USA", "addressLocality" : "Austin", "addressRegion" : "TX", "postalCode" : "78701", "streetAddress" : "500 W 13th Street " }, "logo" : { "@type" : "ImageObject", "height" : 60, "url" : "http://www.realized1031.com/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black-No-Margin-296x60-AMP.png", "width" : 296 }, "name" : "Realized" }, "thumbnailUrl" : "https://f.hubspotusercontent10.net/hubfs/733513/iStock-1008926982.jpg" } ```