A Prime Time To Shelter Capital Gains
Hurricane Ian left a swath of widespread damage through the state of Florida, where whole coastal areas on the gulf side bore the brunt of the storm’s wrath. It has been truly amazing the speed with which federal, state and local officials have marshaled their resources to repair and rebuild the communities left in shambles from the storm surge.
In the wake of this billion dollar natural disaster, along with stubborn inflation and a full-blown correction underway in global equity markets, various classes of real estate assets may have been discounted out of fears of an oncoming recession. The cumulative effect on companies with properties in Florida has been of such concern that I have been fielding calls about the condition of Belpointe PREP, LLC (NYSE American: “OZ”), ever since, so, in the event you missed it, we issued a press release on October 3rd addressing the matter, with the main message being that:
“[F]ollowing an initial assessment, [our] Florida assets have incurred no or minimal damage as a result of Hurricane Ian.
We are working closely with our construction, development and property management teams as well as with our tenants to fully assess all damages and coordinate a return to full operations as quickly as possible ….
While we are still in the process of contacting all of our teams and tenants to make sure they all came through the storm safely, we are pleased that our assets have not sustained any significant damage as a result of Hurricane Ian.”
With 30-year fixed mortgage rates pushing above 6.8% on a national basis and the possibility of an increase after the next Fed meeting, which is slated for November 2nd, I believe the demand for Class A rental properties will remain strong. The migration trend of people moving to the Carolinas, Georgia, Tennessee and Florida is just tremendous, and is, we believe, a strong indicator of where there will be excellent long-term income and capital appreciation potential for investing in select Opportunity Zones.
At Belpointe PREP, LLC (NYSE American: “OZ”), our business model is built around acquiring, developing and owning multiple properties in select cities where our research shows there is strong migration and employment trends, such as Sarasota, Florida, and Nashville, Tennessee, where we already have projects well underway. Other markets we are looking at include Raleigh, Durham, and Charlotte, North Carolina, and St. Petersburg, Florida.
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 their capital gains into a Qualified Opportunity Zone Fund (a “QOF”). Belpointe PREP, LLC (NYSE American: “OZ”), is the only publicly traded QOF where you can purchase units in the open market; there is no minimum investment. One can pair off realized capital gains against a liquid tax shelter where no taxes are due until December 31, 2026 from capital gains realized in 2022.
What’s more, because “OZ” is a listed company, transparency is considerably higher than in that of many privately managed QOFs. In addition, while most other QOFs have limited or restrictive redemption features, OZ unitholders can buy and sell Class A units in the open market.
One more key item, which I think is of huge importance, is that unitholders of 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 OZ in the class of “best Opportunity Zone Funds” in my view.
Investing into a QOF, like Belpointe PREP (NYSE American: “OZ”), allows an investor to defer the tax payment on invested capital gains through the earlier of tax year-end December 31, 2026, or the date on which they sell their investment. 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 (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 (NYSE American: “OZ”) and how reinvesting capital gains into a QOF can be utilized to offset an investor’s tax obligation.
You can contact us at 203-883-1944 or IR@belpointeoz.com.
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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