Listed Opportunity Zone Fund Defers Capital Gains Taxes

The month of October brought about a much-needed rebound for stocks during a year where sellers have had the upper hand. It is being widely reported that the 14% gain for the Dow in October is the largest monthly gain since January 1976. In my view, it comes with rising hopes of the Fed signaling a less hawkish stance on monetary policy and some cautious optimism that inflation might be peaking. While I believe that the gains are always most welcome, rallies in 2022 have appeared to be fleeting, and being that the Fed is data-driven, it will be very interesting to see if the forward data for inflation, labor and housing will influence Fed policy.

Some RIAs may need to consider year-end portfolio rebalancing for tax purposes. Clients with realized capital gains, may be interested in deferring their capital gain taxes. Investing in Qualified Opportunity Zone Funds (“QOFs”)—a government-sanctioned investment vehicle—can provide just such a tax deferral opportunity. As of this writing, any realized capital gains going back to May 6, 2022 (representing a 180-day lookback period) can qualify for deferment. Consider sheltering your or your clients’ 2022 capital gains before the 180-day reinvestment period runs out. Every day the window narrows to shelter capital gains for 2022.

In my view, when looking for investment opportunities that have historically been viewed as effective inflation hedges, multi-family housing within designated Opportunity Zones throughout the U.S. may provide both opportunities for investment appreciation and income in an asset class that is essential to everyday living—rental property.

Belpointe PREP, LLC (NYSE American: “OZ”) has made a number of investments in the state of Florida and in Nashville, Tennessee. Cities with strong migration and job markets are where Belpointe believes constructing and acquiring Class A full-featured apartments within designated Opportunity Zones make for a robust investment thesis. For those RIAs, advisors and investors that hold the view that inflation is going to remain elevated, having the option to pair off realized capital gains against a real estate liquid tax shelter, where no taxes are due from capital gains realized in 2022 (as long as you meet the 180-day reinvestment timeline and continue to hold your investment) until December 31, 2026, is in my opinion, a good fit. I believe that rents that are indexed to CPI or other inflation benchmarks can remain high. Our bullish view on the rental outlook seems to be supported by continued household formation, limited supply and inflation.

At Belpointe PREP, LLC (“Belpointe OZ”), our business model is built around acquiring, developing and owning multiple properties in select cities where our research shows there are strong migration and employment trends. Some of the other markets that we are looking at include Raleigh, Durham, and Charlotte, North Carolina.

Getting back to the business of deferring taxes, investors that have realized capital gains in the past six months from the sale of stocks, real estate, a business, collectibles, planes, boats, livestock, cryptocurrencies, precious metals, an interest in a partnership, or other varieties of assets may want to consider reinvesting those capital gains into a QOF, such as Belpointe OZ, whose Class A units are listed in on the NYSE American under the symbol “OZ” and can be purchased in the open market.

A key feature that we find attractive is when purchasing Class A units in the market there is no minimum investment amount; you can purchase as little as one Class A unit. Thus, pairing off realized capital gains against a liquid tax shelter, where no taxes are due from capital gains realized in 2022 (as long as you meet the 180-day reinvestment timeline and continue to hold the investment) until December 31, 2026. This four-plus year tax deferent might serve as a savvy strategy for 2022 year-end tax planning purposes. Something to really think about.

Because Belpointe OZ is a publicly traded QOF, transparency is higher than in that of many privately managed QOFs. In addition, while most other QOFs have limited or restrictive redemption features, Belpointe OZ unitholders can buy and sell Class A units in the open market. Another notable feature is that Class A unitholders of Belpointe OZ are not at risk of receiving and being liable for any future capital calls. Capital calls are an unfortunate feature many investors may regularly face in acquiring, developing and renovating private opportunity zone properties. Liquidity, no risk of capital calls and diversification put Belpointe OZ in the class of best-qualified opportunity zone funds, in my view.

Investing capital gains into a QOF, like Belpointe OZ, allows an investor to defer the tax payment on those capital gains through the earlier of tax year-end, December 31, 2026, or the date on which the investor sells their investment or experiences another type of inclusion event. Plus, all income and appreciation from the time one invests capital gains into a QOF through December 31, 2047, is potentially tax-free. We spell out how this alternative can work for you in our updated white paper.

Have questions about how Belpointe PREP, LLC (NYSE American: “OZ”) can provide opportunities for investment appreciation and income and help you or your clients to defer or eliminate capital gains tax obligations?

Call or email us and we’ll take the time to answer all of your questions about Belpointe PREP, LLC (NYSE American: “OZ”) and how reinvesting capital gains into a QOF can be utilized to offset tax obligations.

You can contact us at 203-883-1944 or IR@belpointeoz.com.

Cody H. Laidlaw
Editor-in-Chief
Belpointe OZ
255 Glenville Road
Greenwich, CT 06831
T: (203) 883-1944
E: IR@belpointeoz.com

Disclosure: Cody H. Laidlaw is the Chief Investor Relations Officer. Cody is also an investment advisor representative with Seaside Advisory Services, Inc. (d/b/a Seaside Financial & Insurance Services), a SEC registered investment adviser offering advisory accounts and services, and holds a long position in Belpointe PREP, LLC’s Class A units.

Important Information and Qualifications

Belpointe PREP, LLC (“Belpointe PREP”) has filed a registration statement (including a prospectus) with the U.S. Securities and Exchange Commission (SEC) for the offer and sale of up to $750,000,000 of Class A units representing limited liability interests in Belpointe PREP. You should read Belpointe PREP’s most recent prospectus and the other documents that it has filed with the SEC for more complete information about Belpointe PREP and the offering

Investing in Belpointe PREP’s Class A units involves a high degree of risk, including a complete loss of investment. Prior to making an investment decision, you should carefully consider Belpointe PREP’s investment objectives and strategy, risk factors, fees and expenses and any tax consequences that may results from an investment in Belpointe PREP’s Class A units. To view Belpointe PREP’s most recent prospectus containing this and other important information visit sec.gov or belpointeoz.com. Alternatively, you may request Belpointe PREP send you the prospectus by calling (203) 883-1944 or emailing claidlaw@belpointe.com. Read the prospectus in its entirety before making an investment decision.

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