Opportunity Zones: Investor solutions

The Opportunity Zones program, established through the Tax Cuts and Jobs Act, aims to spur long-term private sector investments in low-income communities nationwide. Investors in Qualified Opportunity Funds (QOFs) participating within the designated Qualified Opportunity Zones (QOZs) can take advantage of federal tax benefits in exchange for their investment in distressed communities.

How it works

The Opportunity Zones program offers federal tax incentives for investing realized capital gains in QOFs, which are investment vehicles created to attract investment into under-invested communities. All or a portion of the realized gain must be invested in a QOF within 180 days.[1]

Virtually any entity or individual required to report capital gains can receive Opportunity Zone benefits. The investment offers three potential tax benefits:

  1. A deferral of the tax on the original gain until the earlier (a) the date of the taxpayer sells or exchanges its investment in the QOF, or (b) December 31, 2026.
  2. A reduction of the tax on the original gain: (a) 10 percent discount if the QOF investment is held for five years by Dec. 31, 2026 or the date of disposition, if earlier; (b) an additional 5 percent discount (15 percent total) if held for seven years by December 31, 2026.
  3. No taxable gains on the QOF investment if held for 10 or more years.

[1] Investors receiving gains on a K-1 from an investment may be able to elect December 31 of the tax year as the date of the gain (regardless of the date of the actual capital gain event), and therefore have until June 29 of the following tax year to make an investment into a QOF. Please consult with your tax advisor for eligibility to make this election.

Available investments

If you'd like more information on this project or to receive updates on future Opportunity Zone investments, please click here.

Block 216

Featuring the Ritz-Carlton, Portland

Block 216 is a peerless mixed-use development in the heart of downtown Portland's central business district. Occupying a full block, the site is optimally located in bustling downtown Portland and will be a destination visible on the skyline from any direction.

 

The Arden

Initial closing of OZ equity!

The Arden is a $54.6 million mixed use development located in Madison, Wisconsin. It contains 124 apartments, 51,560 square feet of commercial office and retail space, and a two floor enclosed parking deck.

The developer plans to keep The Arden offering open for additional investment through the OZ program.

Under construction

 

The Wesmont

Now accepting OZ investment!

The Wesmont is an existing building that will be renovated into a 188-unit multifamily apartment community on the northeast side of downtown Indianapolis. The project is located within a vibrant community and is within walking distance to many amenities, including trendy retail shops, restaurants and a popular park with biking and walking trails.

Connect with us today

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Key considerations when reviewing Opportunity Zone investments

  • What is the up-front, annual and profit-interest fee structure of the QOF?
  • Does the QOF have a shovel-ready project to ensure your capital will be invested within the required six months?
  • What is the track record of the project developer or business?
  • Does the project have strong economic fundamentals?
  • Does the QOF plan to have multiple OZ investments, which could complicate the exit strategy and jeopardize the elimination of gains?
  • Does the project forecast commensurate risk-adjusted returns?
Michael Fitzpatrick
"Opportunity Zone investments offer compelling tax benefits and a unique incentive for investors to redeploy capital gains while stimulating community revitalization. This program should be a consideration to investors looking to diversify their investments in a variety of asset classes and geographies."
Michael Fitzpatrick
Executive Vice President and CFO of Baker Tilly Capital, LLC