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Opportunity Zone Funds

What is an Opportunity Zone?

A Qualified Opportunity Zone (QOZ) is a specific area designated by the government where investors can develop real estate projects, or start a business, and gain significant tax benefits. QOZs are usually located in economically underprivileged communities throughout the United States.

 

The Qualified Opportunity Zone program was established under the 2017 Tax Cuts and Jobs Act to uplift Americans from poverty and rejuvenate struggling areas. This initiative creates job opportunities and spurs economic growth in over 8,700 census tracts. Investors who invest eligible capital gains into Opportunity Zones through Qualified Opportunity Funds can avail substantial tax benefits.

A Qualified Opportunity Fund Zone (QOZF) is an investment vehicle explicitly organized to invest in Opportunity Zone assets. To become a QOF, an eligible investment vehicle must self-certify by filing IRS Form 8996. QOFs are often organized as limited partnerships but can also be set up as corporations.​

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What is an Opportunity Zone Fund? 

Potential Tax Benefits Available to QOZ Investors 

Qualified Opportunity Zone Legislation offers QOZ investors a powerful potential combination of tax incentives, including deferral of capital gains taxes and tax-free growth. Prior to December 31, 2026 (Investment cutoff date), if an investors sells any asset that generates a capital gain and invests all or a portion of the gain into QOZ within a specified period of time, generally 180 days thereof, the taxpayer could receive the following benefits: 

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  • Tax Deferral:  Tax liability on capital gains invested in a QOZ is deferred until December 31, 2026. 

  • Elimination:  Capital gains tax on appreciation of QOZ investment is eliminated if interest in the fund is held for at least 10 years. 

QOZ Timeline: 

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Common QOZ Investor Profile

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Sale of Real Estate

  • QOZ investment only requires capital gains from property sales versus section 1031 exchanges, which generally require re-investment of the entire sales proceeds

  • Capital gains 

    generated from the sale of a primary residence and are above primary residence 121 exclusions
  • Property sales sold as a partnership and not eligible for 1031 Exchange treatment can qualify for Opportunity Zone Investment
Business Meeting

Business sale

  • Provides the ability to spread a potentially large tax liability over multiple tax periods

  • Allows for proactive tax planning for the deferred capital gain 

  • Creates a pool of capital that can potentially generate tax-advantaged income and grow tax free over a long duration

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Securities Sales

  • Re-balancing a securities portfolio with embedded capital gains

  • The sale of concentrated position(s) 

  • Potentially generate tax-free growth from QOZ investment along with tax-advantaged income 

  • Reallocate basis and capital gains not invested in a QOZ

Hypothetical QOZ Investment

Contact Info 

15333 North Pima Road 305

Scottsdale, AZ 85260

Phone: 602-931-7607

Email: Info@Waypoint1031.com

About

1031 Exchange

DST

Opportunity Zone Funds

Resources

Marketplace

Contact

Securities are offered through Realta Equities, Inc., Member FINRA  / SIPC, located at 1201 N. Orange Street, Suite 729, Wilmington, DE 19801. Realta Equities, Inc. is not affiliated with Waypoint 1031 Investments.

Opportunity Zone Disclosures:

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  • Investing in opportunity zones is speculative. Opportunity zones are newly formed entities with no operating history. There is no assurance of investment return, property appreciation, or profits. The ability to resell the fund’s underlying investment properties or businesses is not guaranteed. Investing in opportunity zone funds may involve a higher level of risk than investing in other established real estate offerings.

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  • Long-term investment. Opportunity zone funds have illiquid underlying investments that may not be easy to sell and the return of capital and realization of gains, if any, from an investment will generally occur only upon the partial or complete disposition or refinancing of such investments.

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  • Limited secondary market for redemption. Although secondary markets may provide a liquidity option in limited circumstances, the amount you will receive typically is discounted to current valuations.

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  • Difficult valuation assessment. The portfolio holdings in opportunity zone funds may be difficult to value because financial markets or exchanges do not usually quote or trade the holdings. As such, market prices for most of a fund’s holdings will not be readily available.

  • Capital call default consequences. Meeting capital calls to provide managers with the pledged capital is a contractual obligation of each investor. Failure to meet this requirement in a timely manner could elicit significant adverse consequences, including, without limitation, the forfeiture of your interest in the fund.

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  • Leverage. Opportunity zone funds may use leverage in connection with certain investments or participate in investments with highly leveraged capital structures. Leverage involves a high degree of financial risk and may increase the exposure of such investments to factors such as rising interest rates, downturns in the economy or deterioration in the condition of the assets underlying such investments.

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  • Unregistered investment. As with other unregistered investments, the regulatory protections of the Investment Company Act of 1940 are not available with unregistered securities.

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  • Regulation. It is possible, due to tax, regulatory, or investment decisions, that a fund, or its investors, are unable realize any tax benefits. You should evaluate the merits of the underlying investment and not solely invest in an opportunity zone fund for any potential tax advantage.

 1031 Risk Disclosure:

  • There is no guarantee that any strategy will be successful or achieve investment objectives;

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  • Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments;

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  • Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities;

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  • Potential for foreclosure – All financed real estate investments have potential for foreclosure;

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  • Illiquidity – Because 1031 exchanges are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments.

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  • Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions;

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  • Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits

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