QOZ CPA questions/recommendations Philly

9 Replies

Hey All,

I have a few development projects in the QOZ zone in Philadelphia and need some cpa/tax/QOZ guidance.

All properties are owned in a single member LLC. The plan is to develop/rehab them and refi to get all my cash out. The costs of construction will far outweigh the cost of the land/structure. All properties were purchased in 2019. All are 2-4 unit properties.

Can I take advantage of the QOZ tax benefits? What do I have to do to make sure I’m compliant? I believe that if holding the property for a minimum of ten years the gain once sold is tax free is that correct? If The asset is fully deprecated by the time I sell does that mean the entire net from the sale is tax free?

So many questions......

Thanks in advance!

Mayer

Keywords: tax, cpa, accountant, opportunity zone, QOZ, Philly, Philadelphia

Lots of Questions here. 

The first question is really whether or not you have the capital gains to put into the QOZ Fund to take advantage of all of the benefits. You need to "re-invest" capital gains into a qualified opportunity fund in order to get all of the benefits. Once that threshold is behind you then you need to self-certify as a QOZ fund. While right now the certification is not very difficult, there are some bills in congress to require reporting on the social impact of the investment, and who knows what that will look like, but for now, the form is pretty simple. If held for 10+ years you get all of the benefits of the legislation and as you said, all of your gains would be wiped out if sold (actual language is that your basis is increased to the FMV of the property on the date of sale). If you have further questions, feel free to message me.

@Mayer M.

You should make sure this is done correctly now 100% instead of waiting 10 years where you can find that you didn't do it correctly.

1) Did you capitalize the LLC using the sale of capital assets?
2) Is the LLC structured as a partnership or a corporation?
3) Did you self-certify with the IRS?

If you answered no to any of the above questions, you may not be getting the benefit you are looking for.

@Basit Siddiqi

Hi Basit,

Thank you for responding.

I did not use capital gains to purchase these properties nor will I use capital gains to improve the properties. Properties are in a single member LLC.

Based on this am I able to at all take advantage of the QOZ benefits?

Originally posted by @Mayer M. :

@Basit Siddiqi

Hi Basit,

Thank you for responding.

I did not use capital gains to purchase these properties nor will I use capital gains to improve the properties. Properties are in a single member LLC.

Based on this am I able to at all take advantage of the QOZ benefits?

 No