I did some research on this new Opportunity Fund Zone tax benefits. Below are some notes and ideas.

Note: I’m not a CPA or attorney just putting it out there to help inspire some ideas.

An Opportunity zone (OZ) is a tax-favored investment for people with capital gains.

6-pages in the tax document in the new 2017 Tax Cuts and Jobs Act

Goal to encourage long-term investments in low-income communities across the US.

Every major city has some OZ.

Most of Detroit is an OZ plus large portions of Baltimore.

Allows investors to sell their appreciated assets and invest their realized capital gains into one or more designated OZ.

EVEN STOCKS! Non-like kind assets are OK!

After your selling your appreciated asset you have 180-days.

The longer you hold the more benefit you get (up to 10 years).

1) Defer your original capital gain tax obligations until 2026 or until you sell your OZ investment.

2) Discount of 10% or 15% on the taxable amount of your original gains. If you hold more than 5 years your original cap gains decrease 10%

3) If you hold 10 years or more. You will pay NO capital gains tax on any appreciation.

You can self-certify so you do not need an intermediary like in 1031 exchanges.

No investment minimum.

There are some items that get a little unclear… where you should really consult your CPA.

Check out the IRS opportunity comes frequently asked questions page and additional resources below.

Resources to Google: community development financial institutions fund, CDFI Fund map.

Note: Spending $100 dollars to save $20 dollars is not a wise idea. Just like buying a rental next to Grandma’s house because your travel there. A lot of specifics are still being played out but something intriguing to augment an already good investment.

Other ideas: Look at the OZ map and try to find the smaller slivers of OZ. This is called “buying on the line” whereas areas improve on the edge of development you greatly benefit.

I would ask your CPA if they know about these opportunity fund zones. If they don’t you might need a new CPA. If you are a current Hui Deal Pipeline Club member I would be more than happy to refer you to some people and then you can see if you work well together.

There is a lot of rumors floating around how this tax will be implemented later this year. One of these rumors suggests that we might not qualify for the Opportunity Zone Fund. See second to the last page of the attached where they state that we have to do improvements that is the same as the basis in order to qualify.

Resources: Article on Opportunity Fund Zones – https://drive.google.com/open?id=1F8wDToyb9olvq52U9LRMD8cBrJILm8q_

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