I am very interested in the new Opportunity Zone introduced to us by Amanda Han, CPA a while back. There's quite a bit of talk online, but not exactly on how to set up the Opportunity Fund and to get it going. There is an Opportunity Zone area in my "backyard", in which I am interested in investing. None of the local CPAs that I have reached out to seem to know much about it. Is anyone currently involved in an Opportunity Fund and can you share your experience?
@Mandy Cohen While the opportunity zones were finalized and published in June, the IRS and federal government have not communicated the process of setting up and maintaining Opportunity Funds. According to CPAs and tax attorneys that I have spoken to, the IRS still needs to provide additional legal guidance on how Opportunity Funds are to be created and managed and are expected to do so before the end of 2018. Until then, we're all left to speculate, unfortunately.
Thank you Paolo. I'm going to surmise that an investment in an Opportunity Zone area (if the numbers work), should be a good move with or without the Opportunity Fund structure, since development efforts will be focused on the future economic growth of that area. Even though I may be excluded from some of the tax benefits, I'm not sure I want to wait until the end of the year to start investing there. Still thinking about it.
The Opportunity Zone Program must go through the formal rule-making process before the program can be finalized and investments can be made. Treasury must first propose a structure for implementing the new rule, after which the agency will issue a notice of proposed rule-making and will request public comments on the proposal. The comment period typically lasts from 30 to 60 days. Upon reviewing the comments and making any necessary changes to the rule, Treasury will issue a final rule that formally sets up the Opportunity Zone Program.
An individual will be able to set up his or her OZONE. Buying now in the OZONE should not create problems since the benefit comes with the deferral of capital gains. However, you will have to know the mechanics of setting up your fund. There are three "eligible purposes:" stock, partnership interest, and business property. I imagine that if you own an income-producing property and create your fund with that property as the asset, that it would qualify. But as Paolo has said, talk to your accountant first.
In the Denver, Colorado market these OZONES are in some very interesting areas that are very close (within one mile) to some very vibrant areas.
Hi Mandy, Here is a a link to FAQ from the IRS that I found helpful.
If you are still looking for guidance on OZ's feel free to shoot me a PM. I have been heavily involved in these projects.
Is there a retroactive benefit? What if you owned the property before the opportunity zone designation?
Thanks @Patrick DiDomenico
Awesome thanks for the response and info. I set up a fund to acquire and rehab duplexes and single family rentals. happy to share my experience if yours is similar
Looking to invest in an Opportunity Zone Fund. I'm not looking to create my own Fund. Has anything more been fleshed out in the program? I'm still not finding much information online. We're selling a property this year and I'd like to invest the gains in an OZone Fund as opposed to doing a 1031 exchange. Anyone have insights that might be helpful for us?
@Charlene McNamara Do you care where QOZ is investing? I'm looking into QOZ on East Coast. If that's of interested to you feel free to reach out.