{"id":3077,"date":"2022-04-03T11:30:09","date_gmt":"2022-04-03T15:30:09","guid":{"rendered":"https:\/\/myhlaw.com\/?p=3077"},"modified":"2024-06-05T17:26:27","modified_gmt":"2024-06-05T21:26:27","slug":"real-estate-investment-who-can-invest-in-an-opportunity-zone","status":"publish","type":"post","link":"https:\/\/myhlaw.com\/es\/real-estate-investment-who-can-invest-in-an-opportunity-zone\/","title":{"rendered":"REAL ESTATE INVESTMENT: Who can Invest in an Opportunity Zone?"},"content":{"rendered":"

The 2017 Tax Cuts and Jobs Act established thousands of Qualified Opportunity Zones (QOZs) throughout the US.\u00a0 But, who qualifies as an \u00abinvestor\u00bb for the Opportunity Zone program?<\/span><\/h3>\n

These QOZs were created to spur economic growth by extending generous tax incentives to investors who invest their <\/span>qualified capital gains into Qualified Opportunity Funds (QOFs).\u00a0 Ultimately, the federal program open to ALL investors.<\/span><\/p>\n

First, be aware that the investor can be either an individual or an entity.\u00a0 Many people wisely hold their investments in an LLC or trust (even REITs).\u00a0 That is not a problem.\u00a0 Also,\u00a0 the<\/span> investor, whether an individual or entity, does not have to be a US citizen or US resident.<\/p>\n

Foreign nationals can also invest in a Qualified Fund (QF).<\/strong> \"\"<\/a><\/em><\/p><\/blockquote>\n

If you do your investing through an entity, you will likely want to use that same entity as the \u00abinvestor\u00bb in the QF.\u00a0 However, if you may not be required to do so.<\/p>\n

The analysis turns on the question of \u00abWho is the taxpayor?\u00bb<\/em><\/strong><\/p><\/blockquote>\n

If the investment vehicle you use is a \u00abpass-through\u00bb entity, such that you report the gains\/losses on your personal return, then you personally are the \u00abtaxpayor.\u00bb\u00a0 In that case, you have the option.\u00a0 You can either make the investment in the QF with the same investment vehicle — usually an LLC or trust–or you can make the investment in your individual name.<\/p>\n

By contrast, if your investment vehicle is taxed as a C-corp, then that entity is itself the \u00abtaxpayor.\u00bb\u00a0 So, you should use that entity as the investor in the QF.<\/p>\n

Caveat<\/span>:\u00a0 In order to get into the Opportunity Zone program, you have to invest in a qualified fund (QF).\u00a0 These QFs are privately owned and managed, so some of them may impose certain restrictions.\u00a0 One common restriction is that you be an \u00abaccredited investor<\/a>,\u00bb as defined in the tax code.\u00a0 To be clear, this is not a requirement imposed by the federal program itself.\u00a0 But, you may find it is a criteria imposed by managers of certain QFs<\/p>\n

This article addresses just one specific aspect of the Qualified Opportunity Zone program.\u00a0 Be sure to follow these links in order to get additinal information:<\/p>\n