Qualified Opportunity Zone Funds Create Optionality
This week’s column is dedicated to all property owners, real estate agents, brokers, and registered investment advisors-owners that are in the throes of trying to exit properties where prices have peaked. I’ve read stories this past weekend of sellers having listed homes for $1.2 million and having to slash their price to $900K just to get people interested. Some of the air in the single-family residential market is certainly coming out.
Conversely, rents indexed to inflation, such as in Class-A multi-family residential properties, seem to be ticking higher, maintaining a firm bid under these essential commercial properties. Not all real estate is created equal, for sure, and how the current phase of inflation is impacting various subsets of the greater real estate sector is making it very clear where momentum is still solid.
The spike higher in mortgage rates has eliminated tens of thousands of formerly qualified buyers from the affordability matrix of their choice. This is no joke, as it puts a huge burden on buyers who now must choose between less-attractive properties or opting to wait-it-out in an attractive rental alternative until they either figure it out or something changes. This storyline is trending across the U.S.
Assuming a vast number of the owners who are listing their properties now are doing so to capture a lion’s share of the unrealized gains of the past several years, I think it’s important for them to know that they need not swap their saleable asset into another “like-kind” property to avoid capital gains tax. Instead, capital gains from the sale of the property can be invested in Qualified Opportunity Zone Funds (QOFs) to defer payment of capital gains taxes for up to four years.
I believe this solution is truly a once-in-a-lifetime situation that provides a legal and hugely attractive alternative to the 1031 like-kind exchange, with its requirement to buy another physical property within 180 days. We spell this alternative out in our updated white paper. CLICK HERE To Download.
So, here is the investment proposition that Belpointe PREP, LLC (NYSE American: “OZ”) offers that just might be the right fit for those seeking an alternative asset that is liquid. Reinvesting capital gains from the sale of property into a QOF eliminates the need to purchase a replacement (1031) property, saves copious amounts of time searching for a property in already inflated markets and defers and possibly eliminates capital gains out to the end of 2026 if need be.
Belpointe PREP (NYSE American: “OZ”) is the first and thus far the only publicly listed QOF and it requires no paperwork to invest. No QUALIFIED INTERMEDIARY. 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 and possibly eliminate capital gains 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.
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 email@example.com. Read the prospectus in its entirety before making an investment decision.
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