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Countdown To Tax Deadline T-Minus Three Days

Surging Inflation Draws Capital Flows To Real Estate

Inflation is running at its highest rate since 1981. That was a time when the economy was in a recession and jobs were hard to find. So hard, that college grads were standing in line to join the military – and not for officer candidate positions – just job security and benefits.

Today’s inflationary environment is quite different as it comes at a time when jobs are aplenty, and the economy is still benefiting from government stimulus. It can take months for each injection of QE to work its way into and through the financial system. So, as the Fed officially turned off the spigot at the end of March, the effects of QE tailwinds should be felt at least through the end of the third quarter.

Just a couple takeaways from this week’s CPI report that showed annual inflation surging 8.5% higher than a year ago: The stock market initially rallied on the headline as the narrative took hold that it’s hard to believe things can get any worse and peak inflation is setting in. This is the “hopium” narrative. I believe the more pragmatic narrative reveals a broadening of inflationary pressures that will force the Fed to raise rates by a half-point at the May 4 FOMC meeting.

The bond market has currently priced in no less than nine quarter-point hikes in the Fed Funds Rate by year-end. For owners of real estate, a hot CPI number may afford landlords the opportunity to raise rents indexed to CPI and increase cash flow, resulting in potentially higher distributions for investors. And rising rates have the capacity to just keep money flowing out of the bond market and into inflation-sensitive income-producing real estate as one of the quintessential inflation hedges.

This past week, a number of Senators, including Tim Scott (R-SC) and Cory Booker (D-NJ), as well as Representatives, including Ron Kind (D-WI) and Mike Kelly (R-PA), introduced a bipartisan, bicameral bill called the Opportunity Zones Transparency, Extension and Improvement Act (the “OZ Improvement Act”), which is designed to, among other things, enhance and lengthen the benefits for investors seeking to buy into Qualified Opportunity Zone Funds (QOFs). Below is a summary of some of the most relevant parts of the bill in its current form:

Enhanced Transparency

• QOF Reporting – The OZ Improvement Act will expand the reporting requirements of QOFs requiring them to provide the IRS information on, among other things, the census tracks where opportunity zone (OZ) investments are located, the amount of an OZ investment, and certain information designed to assess job creation and growth by OZ investments.
• QOZB Reporting – Qualified opportunity zone businesses (QOZBs) will be required to provide relevant reporting to their QOFs in order to enable the QOF comply with its reporting requirements.
• QOF Investor Reporting – Investors will also be required to include additional information on their annual Form 8997 filing with the IRS, such as the identity of the QOFs in which they have invested, and dates on which their investments were made and are disposed of; in my view not a big deal.
• Penalties for Late Reporting – The OZ Improvement Act also includes certain monetary penalties for QOFs and individual investors who fail to comply with their reporting obligations.
• Treasury Reporting to the Public – The OZ Improvement Act will require the Secretary of the Treasury to provide a comprehensive report on certain aggregated information, including things like the total number of QOFs and the total assets held by QOFs, as well as information about QOFs broader impact on job creation, poverty reduction and new business starts in OZs.
OZ Program Extensions
• Extension of Investment Period – The OZ Improvement Act would extend the capital gains investment deferral through December 31, 2028.
• Basis Step Up – The OZ Improvement Act would also lower the holding period to receive the additional 5% step-up in basis for investors who acquired their OZ interests prior to January 1, 2020 from 7 years to 6 years. In addition, OZ investments made through December 31, 2022 would become eligible to receive the additional 5% step-up in basis; provided they are held for at least 6 years (through December 31, 2028).
• QOF – QOF Investments – The OZ Improvement Act allow QOFs to invest in other QOFs, in a “feeder fund” structure, provided there is only one QOF-to-QOF transaction and the feeder fund invests 95% of its assets into a QOF.
• State and Community Dynamism Fund – The OZ Improvement Act will create a $1B State and Community Dynamism Fund that would provide states and territories with technical assistance and financing support to drive capital to projects and businesses in underserved communities.
• Removal of Certain High Income OZ Tracts – The OZ Improvement Act will require an “early sunset” of certain census tracts with high median family income statistics.
• Designation of Certain Former Industrial Tracts as OZ Tracts – The OZ Improvement Act will allow for certain zero population tracts adjacent to OZs to also be designated as OZs. This addition is intended to allow for the limited expansion of OZs to adjacent tracts formerly used for an industrial purpose and containing a brownfield site (as determined by the EPA or appropriate State authority) and that need revitalization and often have trouble securing financing.
I believe the OZ Improvement Act is a very positive development for QOF investing, as it enhances disclosure and makes for what I think is a more-fair landscape for new development and redevelopment, while at the same time providing strong incentives for new investors to allocate capital to QOFs.
To this point, Belpointe PREP, LLC (NYSE American: “OZ”) is the only publicly listed QOF and requires no paperwork or documentation to invest, providing investors with the ability to pair off 2021 year-end gains with the opportunity for growth and income over the next five years, out to December 31, 2026 (and hopefully soon to 2028), where all capital appreciation and the majority of pass-through income may be tax-free.
Belpointe PREP is building and acquiring multi-family residential Class A luxury apartment dwellings within OZs in cities like Nashville, TN, Sarasota/St. Petersburg, FL, Austin, TX, and the Research Triangle, NC. In our view, our business model is the sweet spot in the real estate market and the ability to execute this model within OZs offers potential for total return on investment.
Time is running out, but fortunately, the process of investing in Belpointe PREP is simple—you or your broker just buy shares of “OZ” in your brokerage account just like any other stock. There is no requirement for paperwork or documentation to meet the deadline. We made it very easy to buy as much tax shelter as one needs with no penalty. Real estate targeting essential housing in markets with bullish migration trends coupled with tax benefits in the stubbornly high period of inflation; that’s our value proposition and we’re excited about it!
Call me with any questions, but don’t let this deadline pass you by without seriously considering capital gains taxes owed for 2021 and how best to manage it.

Cody H. Laidlaw
Belpointe OZ
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 or Alternatively, you may request Belpointe PREP send you the prospectus by calling (203) 883-1944 or emailing 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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