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Investing Capital Gain makes sense

Community Builders Capital Opportunity Zone Alpha Fund

Providing you a way into real estate investment

What are Opportunity Zone?

Opportunity Zones were enacted as part of the 2017 federal Tax Cuts and Jobs Act and are designed to drive long-term capital investments into low-income rural and urban communities. This federal capital gains tax incentive encourages private investors to support investments in designated low-income distressed communities (Opportunity Zone census tracts) through participation in Qualified Opportunity Funds.

What’s an Opportunity Fund?

An Opportunity Fund (or Qualified Opportunity Fund) is a special vehicle to invest in Qualified Opportunity Zone Property. Opportunity Funds must hold at least 90 percent of their assets in Qualified Opportunity Zone stock, partnership interests, or business property. To receive the tax incentives, capital gains must be invested in Qualified Opportunity Funds within 180 days of the date of sale or exchange producing the gains.

How do Opportunity Zones work?

Taxpayers can defer paying federal taxes on capital gains (including those from real estate sales) invested in Qualified Opportunity Funds that invest in low-income communities, under rules released by the U.S. Department of the Treasury. The emphasis of the Opportunity Zone legislature is for investments in distressed under-served communities. Community Builders Capital is uniquely qualified to project manage real estate and business projects in distressed under-served Opportunity zones.

What are the Investor Benefits?

There are three separate benefits offered by this tax incentive:

  • Reinvested capital gains are deferred from taxation until exit from a Qualified Opportunity Fund or December 31, 2026, whichever comes first.
  • The original capital gains reinvested in Qualified Opportunity Fund investments held for the long term receive a reduction in capital gains tax liability, discounted by 10% at the 5-year mark and by an additional 5% at the 7-year mark.
  • Any new gains from Qualified Opportunity Fund investments held for at least 10 years are permanently excluded from the capital gains tax. These Fund investments can be held through as late as 2047 without losing tax benefits.
  • How does the 10-year minimum for the capital gains tax exclusion relate to the December 31, 2026 deadline?
    The December 31, 2026 deadline relates to the maximum period the original capital gains can be deferred from taxation. It does not affect the timing of when the additional capital gains from investing in a Qualified Opportunity Fund can be excluded from taxation. For example, an investor that reinvests capital gains in a Qualified Opportunity Fund in 2018 would have to pay federal taxes on the original gains by December 31, 2026. But that investor could sell his or her interest in the Fund as early as 2028 or as late as 2047 and pay no tax on the additional gains from the Fund investment.

Who can invest in a Qualified Opportunity Fund?

Any federal taxpayer, including individuals, businesses, and corporations, can invest in an Qualified Opportunity Fund. However, the investments must consist of capital gains reinvested during the 180-day period beginning on the date of the sale or exchange giving rise to the gain. Investments must take the form of an equity interest, including preferred stock or a partnership interest with special allocations. They cannot take the form of a debt instrument.

Can a Qualified Opportunity Fund invest in multiple Opportunity Zones?

Yes, there are no limitations on the number of Opportunity Zones an Qualified Opportunity Fund can invest in.

At Community Builders Capital we are here to bring together investors and to collaborate in the real estate Opportunity Zones arena. We also can educate you on the inner workings of investing in Qualified Opportunity Zones, and why it may be the right investment for you.

This new Opportunity Zone legislation has opened the door for many people to be a part of projects they never were able to invest in before. Now this business investment model is expanding into the fun world of real estate providing more people with strong investments that produce results.

Many people want to add real estate investment to their portfolio but don’t know where to start or how to break in. We can help inform you about the process of Opportunity Zone investing and connect you in one place to get started to with the Community Builders Capital OZ Alpha Fund.

Register for our upcoming Investor Webinar

  • Webinar - "Opportunity Zone Investing" Register today
  • Webinar – "Commercial Real Estate Investing through Opportunity Zone Fund" - Register today
  • Webinar - "The Fundamentals of Investing in Multi-Family Properties" - Register today

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