Opportunity Zones Investing

Defer capital gains tax with Opportunity Zones under the Tax Reform Act

The recently passed Tax Reform Act included a potential tax break for investors. An investor may defer capital gains taxes on the sale of any opportunity zones asset. These taxes can potentially be deferred until December 31, 2026, or the date of a sale (whichever is earlier). As discussed below, this original capital gains tax is reduced over time, and if held long enough, new appreciation on the investment can be realized tax free.

How does the opportunity zones program work?

Here’s how the process works. An investor sells an asset and generates a capital gain. The capital gains from that investment must be reinvested within 180 days into a designated Opportunity Zone (OZ). An OZ is a specially designated census tract. Large parts of the U.S. are eligible for designation, including many commercial, industrial and residential areas.

If the investment is held, the capital gains liability on the original investment will be reduced by 10% after five years and by 15% after seven years. After 10 years, the new capital gains taxes generated from the opportunity fund investment are reduced to zero.

We believe this is one of the most beneficial tax reforms in decades. Learn how Virtua Partners can help you potentially take advantage of this opportunity.

Opportunity Zones Expert Lloyd Kendall Jr.Lloyd Kendall JR.
Co-Founder & Principal of Virtua Partners
Published Tax Attorney

Opportunity Zone

The recently passed Tax Cuts and Jobs Act of 2017 created Opportunity Zones, which are specially created geographic districts that grant investors tax breaks for investment capital – including tax-free income.

Opportunity Zone Funds

Invest in Virtua’s Opportunity Zone Fund and potentially enjoy substantial tax breaks by investing your capital gains.

  • Investors may reinvest capital gains from existing investments into an Opportunity Zone Fund and defer/reduce capital gains taxes
  • If held, the original investment’s tax basis increases by 10% after five years and by 15% after seven years
  • After 10 years, investors permanently eliminate capital gains tax opportunity fund investment capital gains.

 

 

Experience the Growing Buzz
Behind Opportunity Zones

 

These articles are for information purposes only and are not written or produced by Virtua Partners or any affiliate.

Hypothetical Tax Savings Offered
by the Opportunity Zones

What are the potential tax savings on a 10-year, $100,000 capital gains investment in an Opportunity Fund and a traditional portfolio?
Assumptions:

1) 5% annual investment appreciation;
2) 37% combined tax rate

 

*This example is a hypothetical illustration of mathematical principles as it relates to the new tax code and does not predict or project the performance of an investment or investment strategy. Figures used may not apply to every tax scenario. Check with your tax professional if you have any questions regarding your specific tax scenario.

The Opportunity Fund

Invest in the Opportunity Zone Fund, and potentially enjoy substantial tax breaks by utilizing your tax dollars.

It’s possible to generate stable cash flow and receive additional tax benefits through expensing and depreciation.

Resources

Contact Information

Zachary Chavez
Vice President
Virtua Capital Management, LLC

480-757-6503
zchavez@emersonequity.com

 

Summary of the Risks of the Offering

Specifically, investors in this Offering risk losing all capital invested therein and/or may not generate the returns at the levels the Company expects.

Prohibition of Transfer of Membership of Transfer and Withdrawal of Membership from the Company; Members may not withdraw without Consent of the Company Manager or in contravention of SEC Rule 144.

Opportunity Zone Program Risks

The Opportunity Zone Program is newly created, and final regulations have yet to be issued, which, when issued, may impact the Fund in unanticipated ways.

To take advantage of certain tax benefits, regarding the exclusion of future gains, investors must hold their investments in the Fund and the Fund must maintain its status as Qualified Opportunity Fund, for 10 years.

The Manager’s intent to comply with the requirements of Section 1400Z of the Code may adversely affect the timing or structure of exit from investments or the success of those investments.

Opportunity Zone Real Estate Risks

The Opportunity Zone Fund’s business is subject to all the risks associated with the real estate industry.

Investments in real estate are speculative in nature.

The Manager’s intent to comply with the requirements of Section 1400Z of the Code may adversely affect the timing or structure of exit from investments or the success of those investments.

Many of these factors are not within the Fund’s control and could adversely impact the value of the Fund’s investments. These factors include, but are not limited to:

  • Conditions affecting real estate in specific markets in which the Fund may invest, such as oversupply or reduction in demand for real estate;
  • Changes in interest rates and availability of attractive financing;
  • Changes in real estate and zoning laws;
  • Environmental and/or engineering issues unforeseen in due-diligence, and changes in environmental legislation and related costs of compliance;
  • Condemnation and other taking of property by the government;
  • Changes in real estate taxes and any other operating expenses;
  • The potential for uninsured or underinsured property losses.

Articles featured on this page are for informational purposes only, not written or produced by Virtua. This is not an offer to sell nor a solicitation to buy Virtua Opportunity Zone I, LLC. That can only be done by our current confidential Private Placement Memorandum (“CPOM”). Securities offered by Emerson Equity LLC. For accredited Investors only. Limited liquidity.  The shares being sold in this offering have not been approved or disapproved by the Securities and Exchange Commission or any state’s securities division. Nor has the Securities and Exchange Commission or any state securities department passed upon the accuracy or adequacy of the CPOM or the disclosures provided therein. Any representation to the contrary is a criminal offense.