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New Proposed Extended Tax Benefits for Opportunity Zone Funds

Rising Rates and Inflation Provide Stiff Tailwinds For Class-A Multifamily Real Estate

The two co-authors of the legislation that created Opportunity Zones—Senator Cory Booker (D-NJ) and Senator Tim Scott (R-SC)—are attempting to make investing into Qualified Opportunity Zone Funds (QOFs) even more attractive for new and current investors. On April 7, 2022, they introduced a bill titled the Opportunity Zones Transparency, Extension, and Improvement Act, designed to enhance the spirit of the original legislation and the benefits for investors seeking to invest through QOFs. The bill has strong bipartisan support, and while still in the early stages I believe it should easily pass into law.

Below is a summary of the bill in its parts that details what’s on the table:

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 to 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.

OZ Program Improvements

  • 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

This week, Treasury yields continued to push higher in anticipation of Fed tightening at the FOMC meeting scheduled for May 4th. As of Wednesday evening, CME Group’s FedWatch Tool was predicting a 93.2% probability of a 25-50-basis point rate hike, and St. Louis Fed President James Bullard, in a presentation to the Council on Foreign Relations on Monday, stated that he wouldn’t rule out the possibility of a 75-basis point hike.

As of Wednesday evening, the CME FedWatch Tool was also projecting a 47.5% chance of up to a 50-basis point hike (and 49.3% chance of up to a 75-basis point hike) in June, and a 48.1% chance of an additional 25-basis point hike in July that could take the Fed Funds Rate up to between 1.75%-2.00%. I believe that under these conditions, the investment proposition for multi-family properties where rents indexed to CPI and/or short-term interest rates becomes ever more compelling.

To this point, Belpointe PREP, LLC (NYSE American: “OZ”) is the only publicly listed QOF and it 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 the capital appreciation and the majority of pass-through income may be tax-free.

Yesterday Belpointe PREP’s Class A units (NYSE American: “OZ”) were trading at, and at times slightly at a discount to, their stated NAV of $100 per unit, while leading multi-family REIT stocks like AvalonBay Communities Inc. (NYSE: “AVB”) and Equity Residential (NYSE: “EQR”) are trading in excess of 3x of book value.

Granted, OZ is just in its early stages of development, but, seeing how well residential real estate stocks are trading, I believe there is a compelling argument to be made for investors to seek out early-stage real estate companies with fresh capital to deploy in a sector with solid fundamentals.

Belpointe PREP’s strategy is to build and acquire multi-family residential Class A luxury apartment dwellings in Opportunity Zones within 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 Opportunity Zones offers potential for total return on investment.

Again, there is no requirement for paperwork or documentation to invest in OZ. We made it as easy as possible for all investors to invest in multi-family residential real estate targeting markets with bullish migration trends and coupled with Opportunity Zone tax benefits in this stubbornly high period of inflation. That’s our proposition and we’re excited about 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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