There are two separate amounts and they get different treatment, which is where most of the confusion in the articles comes from.
The gain you rolled in is deferred, not erased. Under the current regime for post-2026 investments the deferral runs on a rolling five year basis rather than to a single fixed date, and at the end of that period the deferred gain becomes taxable. So if you put in a 300,000 gain, that 300,000 eventually gets recognized and you pay on it, with the rate and any basis adjustment depending on rules a tax professional should walk you through with your numbers.
The second amount is the appreciation on your fund investment itself. If your 300,000 grows to 500,000 inside the fund and you hold the interest for at least ten years, the 200,000 of new appreciation is the piece the ten year rule addresses. That's the benefit people describe as elimination, and it applies only to the growth on the new investment.
On your second question, the conditions run for the whole period rather than being tested once. The fund has to keep meeting the 90 percent asset test on a semiannual basis, and any QOZB it owns has its own ongoing tests. If the fund falls out of compliance, that's a problem for your position even though you did nothing wrong, which is why manager selection matters more than the tax mechanics here. You also can't refinance or restructure your fund interest carelessly, since certain transfers or dispositions can end your holding period early. Any move on your interest before year ten should go past a tax advisor first.
