A Savvy Strategy To Park Capital Gains And Wait It Out
For sale signs in prime neighborhoods across the U.S. are popping up more often than at any time in the past couple of years. As one realtor I spoke to noted in a recent open house, the most recent 75-basis point rate hike by the Fed sent a tremor through the market. Where there used to be bidding wars for choice properties, there are now only a handful of potential buyers showing up at the open houses.
The mood has changed and may further be impacted when the Fed decides to raise rates again, currently forecast at 50-75 basis points, at its next FOMC meeting slated for July 27. Upcoming inflation data this week and next may likely show a mild tempering of the current 8.6% annual rate, reflecting a decline in energy and commodity prices, but the Fed still has a lot of work to do to get anywhere close to their 2% target for annual inflation.
For real estate agents, financial advisors and owners of real estate assets looking to capture capital gains enjoyed from the bullish runup in real estate, there is an investment alternative to the 1031 like-kind exchange and its requirement to buy another physical property within 180-days. We spell this alternative out in our updated white paper. CLICK HERE TO DOWNLOAD.
Belpointe PREP, LLC (NYSE American: “OZ”) might be the right fit for those seeking an alternative asset that is liquid. Investing in OZ’s Class A units eliminates the need to purchase a replacement (1031) property, saves copious amounts of time searching for a property in already inflated markets and defers capital gains out to the end of 2026 if need be.
Let me put this proposition in simple terms for those just now getting acquainted with investing in Qualified Opportunity Zone Funds. (QOF). Belpointe PREP (NYSE American: “OZ”) is the first and thus far the only publicly listed QOF and it requires no paperwork to invest. Belpointe PREP provides investors with the ability to pair off year-to-date 2022 gains, using a 180-day look-back window, and reinvest those capital gains to defer taxes, in addition to offering investors an opportunity for growth and income, out to December 31, 2026, where all capital appreciation and the majority of pass-through income may be tax-free.
Download and read up on all of the incredible tax benefits that investing in Opportunity Zones provides, from both the federal and state governments. The U.S. Treasury has certified 8,764 communities in all 50 states, the District of Columbia, and five U.S. territories as Opportunity Zones where nearly 35 million people reside according to the U.S. Treasury. These Opportunity Zones represent communities in need of direct investment by private investors and where there is significant potential for income and growth.
While there are multiple QOFs to choose from, none are publicly listed and traded on a national securities exchange other than Belpointe PREP (NYSE American: “OZ”). And with Belpointe PREP there is no risk of future capital calls, as spelled out in Belpointe PREP’s prospectus and SEC filings. Most other QOFs are illiquid or required early exit fees and can require investors to add capital to cover unexpected costs in the projects that they sponsor.
Belpointe PREP is building Class-A full-featured multi-family residential housing communities in markets that it believes have strong macroeconomic fundamentals, such as Nashville, TN, Tampa-St. Petersburg, FL, and Sarasota, FL NC.
In addition, Belpointe PREP’s management team is actively seeking to acquire other QOFs that have stabilized their properties, where there are some clear benefits to acquiring seasoned properties in lieu of new construction with all its attendant risks. Our acquisition team is actively looking for sellers of properties within Opportunity Zones. Belpointe PREP has cash and currency in the form of its Class A units “OZ” that provide the kind of liquidity that some selling parties may desire.
Belpointe PREP commenced trading on the NYSE American on October 18, 2022, at $100 per Class A unit. As of today (June 30, 2022), units of OZ are trading around $97, a 3% discount to NAV, whereas the major stock market indexes are down between 20%-35%, take your pick. Inflation-sensitive, income-generating multi-family residential real estate is a necessity and revitalizing cities with the blessing of federal and state mandates, laws and tax provisions, is, I believe, a truly a purpose-driven endeavor to improve the lives of millions of people while also giving those that invest in these communities’ excellent potential for stable income, long-term growth and multiple tax advantages.
Cody H. Laidlaw
255 Glenville Road
Greenwich, CT 06831
T: (203) 883-1944
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 firstname.lastname@example.org. Read the prospectus in its entirety before making an investment decision.
This communication, including any links embedded herein, may not be distributed in any jurisdiction where it is unlawful to do so. Nothing in this communication is or should be construed as an offer to sell or solicitation of an offer to buy Belpointe PREP’s Class A units in any jurisdiction where it is unlawful to do so.
Neither Belpointe PREP nor any of its affiliates provide investment or tax advice and do not represent in any manner that the outcomes described herein will result in any particular tax consequence. Prospective investors should consult their own investment and tax advisers concerning the U.S. federal, state and local income tax consequences, as well as any tax consequences under the laws of any other taxing jurisdiction, in relation to their personal tax circumstances, which may vary for prospective investors in different tax situations.
This communication may contain estimates, projections and other forward-looking statements, typically identified by words and phrases such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” or the negative of such words and other comparable terminology. However, the absence of these words does not mean that a statement is not forward-looking. Any forward-looking statements expressing an expectation or belief as to future events is expressed in good faith and believed to be reasonable at the time such forward-looking statement is made. However, these statements are not guarantees of future events and involve risks, uncertainties and other factors beyond Belpointe PREP’s control. Therefore, we caution you against relying on any of these forward-looking statements. Actual outcomes and results may differ materially from what is expressed in any forward-looking statement. Except as required by applicable law, including federal securities laws, Belpointe PREP does not intend to update any of the forward-looking statements to conform them to actual results or revised expectations.
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