Thread by @DallasAptGP

Wanna be an Opportunity Zone investor?

It is the most tax advantaged way to invest in Real Estate

There are rules to learn first. A few CANNOT be broken or you lose all of the promised benefits

Don't throw your money in the dreaded BLACK HOLE of OZ investing

🧵 below

When you boil it all down, there are two fundamental responsibilities for investors:

1️⃣Realize capital gains through the sale of an asset
2️⃣Invest some or all of those capital gains into a QOF within 180 days

The starting gun for that 180-day time frame can differ depending on where the capital gains originated

That is where the BLACK HOLE of OZ investing is

There are special timing considerations for gains coming through a partnership or S corporation

In the most basic case

Someone realizes a qualifying gain on the sale of stock on Feb. 1, 2023

They must reinvest the “capital gain dollars” into a QOF within 180 days (including the sale date) of the Feb. 1, 2023, transaction date

They have until 7/31 (180 days not 6 months)

The 180-day timing considerations are more complex if the gains are generated by a partnership or S corporation

There are 3 options but the taxpayer can ONLY choose one of them

This becomes important if they want to invest into multiple OZ Funds

Option #1️⃣
Just like in the stock sale example: They reinvest the “capital gain dollars” into a QOF within 180 days (including the sale date) of the Feb. 1, 2023, transaction date

This creates a window from 2/1/23 through 7/31/23

Option #2️⃣
Reinvest the “capital gain dollars” into a QOF within 180 days of the partnership or S corporation tax calendar year end

This would normally create a window from 12/31/23 through 6/28/24

Option #3️⃣
Reinvest the “capital gain dollars” into a QOF within 180 days of the partnership or S corporation 1st tax filing date

This would normally create a window from 3/15/24 through 9/11/24

If you followed along closely then you'll notice that a BLACK HOLE was created and I outlined it on the chart below

If the investor funds a QOF outside an eligible investment window, then the gain in question will not qualify for the tax benefits of an Opportunity Zone investment

This is black and white

Don't throw your money into a BLACK HOLE

That's a wrap!

I am not a CPA or tax attorney. Check with them before implementing a complicated strategy.

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