Sophisticated investor divests a portion of his stock market gains and invests in a series of Qualified Opportunity Zone projects across the country before December 31 — the last day to receive a 10% basis step-up on taxes due
LOS ANGELES, Nov. 15, 2021 (GLOBE NEWSWIRE) -- Kay Properties & Investments recently helped a sophisticated high-net-worth investor strategically identify viable Qualified Opportunity Zone (QOZ) projects to help him achieve greater diversification from a heavy stock market concentration and take advantage of the unique tax benefits associated with the law outlined by the 115th Congress in Public Law No: 115-97 on December 22, 2017.
According to Betty Friant, Senior Vice President with Kay Properties & Investments, expert tax advantaged real estate advisor and highly experienced QOZ investment advisor, the client knew a little about QOZs, but relied on Kay Properties & Investments and their own CPA and attorney to help create a complete business plan that included both short-and long-term objectives.
“This particular investor did really well in the stock market but wanted to add diversification to his overall portfolio. Kay Properties helped him identify different Qualified Opportunity Zone projects that contained multiple properties distributed across many different geographic regions, multiple asset types, and with a diverse tenant mix,” said Friant.
According to the Internal Revenue Service, Qualified Opportunity Zones were created by the United States Congress as part of the Tax Cuts and Jobs Act of 2017. The purpose of the program was to encourage long-term investments in low-income communities across the United States. The United States Department of Treasury estimates there are more than 8,700 QOZs in the country, including in territories like Puerto Rico. If the investor invests gains from a previous investment before December 31, 2021, and then holds their interest in the QOZ fund for at least five years, the tax they owe in December 2026 may be reduced by approximately 10% by virtue of the stepped-up basis. Furthermore, if the investor holds the investment for 10 years, there is potentially no tax on any appreciation on reinvested gains that they made.
“So obviously, one of the keys to this investment strategy for this investor was to make sure the QOZ investment was initiated before December 31, 2021, after which he would not be able to receive a 10% step-up basis on his original investment,” said Friant.
According to Friant, Qualified Opportunity Zones may be able to provide investors a unique way to reduce taxes while doing something good for those who are less fortunate. By simply rolling profits over from the selling of a business, stocks, bonds, cryptocurrency, jewelry, art or real estate into a Qualified Opportunity Zone, investors can reap an array of tax benefits — assuming they make the investment within six months of realizing their capital gain.
“But the thing about QOZs is that their designation is based on data from the 2010 census, and QOZ’s didn’t become law until 2017. So here we are in 2021 and some of these previously identified opportunity zones are now on the edge of some of the hottest real estate in the United States,” said Friant.
About Kay Properties and www.kpi1031.com
Kay Properties & Investments is a national Delaware Statutory Trust (DST) investment firm. The www.kpi1031.com platform provides access to the marketplace of DSTs from over 25 different sponsor companies, custom DSTs only available to Kay clients, independent advice on DST sponsor companies, full due diligence and vetting on each DST (typically 20-40 DSTs) and a DST secondary market. Kay Properties team members collectively have over 115 years of real estate experience, are licensed in all 50 states, and have participated in over $21 billion of DST 1031 investments.
Diversification does not guarantee profits or protect against losses. All real estate investments provide no guarantees for cash flow, distributions or appreciation as well as could result in a full loss of invested principal. Please read the entire Private Placement Memorandum (PPM) prior to making an investment. This case study may not be representative of the outcome of past or future offerings. Please speak with your attorney and CPA before considering an investment.
All offerings discussed are Regulation D, Rule 506c offerings. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential distributions, potential returns and potential appreciation are not guaranteed. For an investor to qualify for any type of investment, there are both financial requirements and suitability requirements that must match specific objectives, goals and risk tolerances. Securities offered through Growth Capital Services, member FINRA, SIPC Office of Supervisory Jurisdiction located at 2093 Philadelphia Pike, Suite 4196, Claymont, DE 19703.
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Cary Brazeman, 310-205-3590, cary@crelix.com
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