SydCap OZ Fund

Real Estate

Broader Dynamic:

The hope and intent is that people with social interest and the financial capacity, who want a return, will want to help via these projects intended to have a social impact. The result should be more affordable housing across the United States as well as the redevelopment of formerly active commercial zones in addition to new development. It’s not simply a way to defer taxes by building another hotel in any given downtown area by meeting basic criteria.

Basics on Investment:

The basic requirements of investing in an Opportunity Zone are as follows:

  1. Anyone that would like to invest in a Qualified Opportunity Zone (QOZ) must do so by reinvesting existing, realized capital gains.
  2. To be eligible for tax breaks, they must invest those capital gains through a Qualified Opportunity Fund (QOF).
  3. They must reinvest their capital gains in a QOF within 180 days of the realized exchange date of those gains.

Once capital gains are reinvested in an Opportunity Fund, investors qualify for a temporary tax deferral on their realized, reinvested gains. Taxes can be deferred until the sale date of their OZ asset, or until December 31, 2026, whichever comes first.

Benefits to Investor:

Plain and simple, the longer someone holds an investment in an Opportunity Fund, the larger their tax break becomes.

If you sell an OZ asset after 5 years, 10% of their original deferred gain is excluded from taxation. If you sell after 7 years, 15% of their original deferred gain is excluded from taxation.

If you hold the asset for 10 years, qualify for “permanent exclusion from taxable income” on your Opportunity Zone gains, not the original deferred gains, as those can only be deferred until 2026, as previously mentioned.

Uncertainty:

All of these tax breaks present a huge new opportunity for those looking to invest in commercial real estate throughout the United States.

The current issue with investing in commercial real estate in Opportunity Zones, however, is the difficulty in actually finding target properties within them. While it’s clear that there are, in fact, opportunities to be had within QOZs, it’s not often clear where those opportunities lie on a property-level basis.

 

Overall, Opportunity Zones present substantial benefits to those who invest in them for the long haul, making it important to begin your property search sooner rather than later, as these areas are likely to become saturated.

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Home Ownership

Residential Down Payment Assistance for those with everything in place but disposable cash on hand. It’s not normal to have that kind of cash anyway.

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Workforce Development

Exploring and developing relationships and strategic partnerships with community agencies, groups, companies and schools to create avenues for both short-term and long-range workforce development opportunities.

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Non-Gentrification

For a healthy return right out of the gate, support acquisition and promote growth through leading companies in their communities that pay it forward.

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