Opportunity Zone Question

1031 Exchanges
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Opportunity Zone Question

Holly High
Real Estate Professional · Islamorada, FL · Member since 2016 · 7 posts · 4 votes

I had a sale involving Capital Gains about 151 days ago. While there is a property that I like, the one I love, cannot close within the 180 window. I have a small Opportunity Zone Fund - can I simply invest the capital gain from my recent sale into my LLC and then purchase the 'replacement' property in a couple of months? Grateful for any feedback.

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Scott McIntosh
Attorney · Lexington, KY · Member since 2019 · 41 posts · 37 votes
7y

Holly— as long as your recently realized capital gains are placed in your QOF within 180 days of realization you’ll get the deferral and be eligible for the other OZ benefits. Your QOF has a separate timeline for deploying the capital and just has to meet the 90% threshold every 6 months, so that should work with your anticipated closing timeline. 

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  • Scott McIntosh
    Attorney · Lexington, KY · Member since 2019 · 41 posts · 37 votes
    7y

    Holly— as long as your recently realized capital gains are placed in your QOF within 180 days of realization you’ll get the deferral and be eligible for the other OZ benefits. Your QOF has a separate timeline for deploying the capital and just has to meet the 90% threshold every 6 months, so that should work with your anticipated closing timeline. 

    2Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    Unless I'm missing something, your 1031 Exchange funds have to go into a "like property" within the 180-day window. You can't transfer them somewhere else and then spend them later. Find a property before you lose the benefit.

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    1Reply
  • Holly High
    OP
    Real Estate Professional · Islamorada, FL · Member since 2016 · 7 posts · 4 votes
    7y

    Thank You Scott!  That was exactly the answer I was hoping for!!!

    1Reply
  • Bryan Mills
    Attorney · Birmingham, AL · Member since 2016 · 43 posts · 28 votes
    7y

    @Holly High

    Does your LLC have any members other than you? The reason I ask is that it must be taxed as a partnership or corporation to be able to qualify as an OZ Fund.

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  • Alina Trigub
    Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
    7y

    @Holly High

    My understanding the gains must be realized in order to invest in Opportunity Zones, which entails having a tax document for these gains from 2018. 

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  • Holly High
    OP
    Real Estate Professional · Islamorada, FL · Member since 2016 · 7 posts · 4 votes
    7y

    Thank you Bryan. You are correct. It is not a single member LLC.

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  • Jason Thibault
    North Scituate, RI · Member since 2017 · 1 post · 0 votes
    4y

    Hello everyone,

    My question is regarding purchasing a property in a opportunity that wasn’t a property that was identified as my 3 for a 1031 exchange.

    When does the 180 day period start,

    -once my 1031 intermediary releases the funds?

    - the day the transaction is closed?

    I have researched multiple sites and the literature with the IRS states;

    “Once the funds have been transfer”

    So just trying to see if anyone has run into this and got a answer, I didn’t have a corporation for the property sold so I believe it will be the day of the sale.

    Any information is greatly appreciated!

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  • Chip Cook
    Member since 2021 · 7 posts · 3 votes
    4y

    For any OZ investors.....I'm selling 2 SFH properties in the same OZ in Idaho. Cash flowing. I BRRRR'd them and didn't know about the OZ benefits. Now, I'm looking to turn around and reinvest in the same area. Hit me up if you want more details. Gross rents are $2600/month with rental contracts through next year.

    1Reply
  • Olivia Leija
    Rental Property Investor · Weslaco, TX · Member since 2020 · 58 posts · 17 votes
    4y

    Hello 👋. Were you able to utilize an opportunity zone fund for your investment?  I am looking to doing opportunity zone investing in Texas. Bigger pockets episode #599 was life changing!

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