Bonus Depreciation & OZ 2.0, With Coni Rathbone
Opportunity Zones 2.0 has brought sweeping changes to the nation’s most powerful tax incentive—making the program permanent and restoring one of its most valuable tools: 100% bonus depreciation.
On this episode of The Opportunity Zones Podcast, Jimmy Atkinson is joined by Coni Rathbone, securities attorney at VF Law and OZ Insiders member. Coni shares her perspective on how permanence, bonus depreciation, and other OZ 2.0 provisions will reshape Qualified Opportunity Funds, real estate development, and high net worth investor strategies.
Guest: Coni Rathbone, VF Law
About The Opportunity Zones Podcast
Hosted by OpportunityZones.com founder Jimmy Atkinson, The Opportunity Zones Podcast features guest interviews from fund managers, advisors, policymakers, tax professionals, and other foremost experts in the Opportunity Zones industry.
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Episode Summary
In this episode of The Opportunity Zones Podcast, Jimmy Atkinson is joined by Coni Rathbone, a securities attorney at VF Law and member of OZ Insiders. Coni brings her legal expertise and recent writing on Opportunity Zones 2.0 to the discussion, with a particular focus on bonus depreciation and how the new legislation impacts Qualified Opportunity Funds (QOFs), developers, and investors.
Introduction and Background
Jimmy welcomes Coni, who is based in Boise, Idaho. Coni shares her enthusiasm for the Opportunity Zones 2.0 legislation passed in July 2025, which made the program permanent. She thanks Jimmy for his ongoing work to keep the industry informed, noting that she relied on some of his articles and analysis in preparing her own recent publication on OZ 2.0.
Coni explains that her legal practice has long been focused on securities work, especially helping entrepreneurs and developers raise capital through private placements. The Opportunity Zones incentive, and now its expanded second version, has become an increasingly important part of that work.
What OZ 2.0 Means for Investors
The conversation begins with the big-picture changes. Coni emphasizes that permanence solves one of the biggest issues in the original statute. Previously, investors worried about a looming sunset date, which created hesitation and short-term thinking. By removing the expiration and locking in OZs as a permanent part of the tax code, OZ 2.0 provides certainty and stability.
She highlights several of the key provisions:
- Program permanence ensures long-term planning is possible for investors, fund sponsors, and developers.
- Enhanced reporting requirements bring more transparency and accountability.
- Rural incentives help channel capital into smaller markets and underserved communities.
- The 10-year hold benefit remains intact, preserving tax-free appreciation for long-term investors.
Jimmy points out that permanence will likely draw in a new wave of high net worth investors and family offices who were previously reluctant to commit.
The Return of Bonus Depreciation
Coni then turns to one of the most exciting features of OZ 2.0: the restoration of 100% bonus depreciation for assets acquired and placed in service within an Opportunity Zone by a QOF or a Qualified Opportunity Zone Business (QOZB).
She explains that bonus depreciation had been phasing out under prior law, dropping year by year until it was set to disappear. The new legislation resets the clock, restoring the ability to fully expense certain assets in the year they are placed in service.
This has immediate implications for OZ real estate projects:
- Tangible personal property such as appliances, flooring, furniture, and equipment can qualify.
- Certain land improvements, like parking lots and landscaping, may also be eligible.
- Cost segregation studies become especially valuable, identifying components that can be depreciated more quickly.
Beyond real estate, Coni underscores the enormous opportunity for manufacturing facilities. Equipment-heavy businesses can now fully expense the cost of machinery, tools, and other assets in the year they are placed in service. For manufacturers locating in OZs, the ability to pair bonus depreciation with the 10-year gain exclusion makes OZ 2.0 especially attractive.
By taking these deductions upfront, investors can significantly reduce taxable income from the project in the early years. When combined with the 10-year tax-free appreciation benefit, the effect is a powerful mix of immediate and long-term tax mitigation.
Jimmy notes that many sponsors are now revisiting their pro formas, recognizing that reinstated bonus depreciation may change the timing of investor returns and overall tax benefits.
How Depreciation Works with OZ Exits
Coni clarifies an important point about depreciation recapture. Normally, when property is sold, investors must pay tax on the depreciation taken. However, under Opportunity Zones, the 10-year election allows investors to step up their basis to fair market value when they exit. This wipes out capital gain, including depreciation recapture.
She calls this one of the most attractive elements of OZ 1.0, which continues under OZ 2.0. When layered with the restored bonus depreciation, investors get the best of both worlds: upfront deductions and elimination of recapture on exit.
Structuring Considerations for QOFs and Developers
The discussion then turns to practical structuring. Coni notes that attorneys and sponsors need to revisit how their offering documents, operating agreements, and partnership allocations are drafted. With bonus depreciation back in play, questions arise about how deductions will be shared among investors, especially in multi-member QOFs.
She stresses:
- Ensure that partnership allocations match economic intent and tax law.
- Clarify how depreciation flows through to individual investors.
- Revisit subscription agreements and private placement memoranda to disclose the availability of bonus depreciation.
- Consider conflicts of interest where developers may also be investors.
Jimmy observes that many OZ sponsors are developers or entrepreneurs with limited experience in securities offerings. Coni agrees, explaining that part of her job is to guide them through the complexities of private fundraising while ensuring compliance with SEC rules.
The Role of Securities Attorneys in Opportunity Zones
Coni elaborates on her role in the OZ ecosystem. She helps sponsors navigate Regulation D offerings, choosing between 506(b) and 506(c), and ensuring that offerings are properly limited to accredited investors where required. She drafts private placement memoranda, subscription agreements, and operating agreements that are tailored to the unique aspects of Opportunity Zone projects.
She emphasizes that compliance is essential. A mistake in structuring or disclosure can jeopardize not only the securities offering but also the OZ tax benefits for investors.
Benefits for High Net Worth Investors
Jimmy asks about the implications for high net worth investors. Coni notes that OZ 2.0 continues to provide:
- Deferral of eligible capital gains until 2028.
- Tax-free growth on investments held 10 years or more.
- Accelerated upfront deductions through bonus depreciation.
For high net worth individuals with significant capital gains, the combination of these incentives remains unmatched by other planning strategies.
Rural Incentives and Community Impact
Coni also highlights the rural incentives included in OZ 2.0. Many rural zones have struggled to attract investment since the original program launched in 2018. By layering in additional benefits, Congress hopes to direct more capital toward projects in small towns and underserved regions.
Jimmy and Coni agree that this could create meaningful impact, not only in large cities but also across rural America.
Conclusion
As the episode wraps up, Coni encourages sponsors and investors to revisit their strategies in light of OZ 2.0’s permanence and restored bonus depreciation provisions. She notes that legal guidance is more important than ever to ensure proper structuring and maximize tax benefits.
Jimmy thanks Coni for her expertise and for sharing insights from both her legal practice and her recent writing. The conversation closes with optimism about the next era of Opportunity Zones—an era defined by permanence, transparency, and powerful tax incentives.