What is the Qualified Opportunity Zone (QOZ) Program and How Does it Work?
The QOZ Program was created by the federal government in 2017 as part of the Tax Cuts and Jobs Act to encourage investment in lower-income communities across the United States. The program provides tax incentives in exchange for the commitment of long-term capital to these communities through investment vehicles known as Qualified Opportunity Funds (QOF). California investors have access to dozens of designated zones across the state.
Each qualified opportunity zone is a designated census tract selected by a state governor and certified by the U.S. Department of Treasury. There are more than 8,700 qualified opportunity zones across the United States, including throughout California.
How does the Qualified Opportunity Zone (QOZ) Program work?
A Qualified Opportunity Fund (QOF) is an investment vehicle that is organized as either a partnership or corporation and holds at least 90% of its assets in QOZ property. QOFs can hold single or multiple assets and are able to make investments in a wide variety of real estate. These investments include Class A apartment buildings, industrial warehouses, life science facilities, self-storage, student housing, and hotels.
California investors considering QOFs have the option to set up and manage their own QOF or take advantage of professional management services through a company like Legacy. Those that choose the DIY method will be responsible for creating the entity, filing the required IRS forms, covering any associated formation costs, and ensuring that their QOF meets the various compliance requirements at regular intervals. Legacy’s partnership with leading sponsor companies provides investors with access to an inventory of professionally managed QOFs.
Read more about Utilizing a Qualified Opportunity Zone Fund as a Tax Mitigation Strategy →
At Legacy, we work with you to build an investment strategy tailored to your unique goals, schedule, skill level, and finances. Give our knowledgeable team a call to learn more about the potential benefits of the Qualified Opportunity Zone Program and if they align with the legacy you want your investments to build.
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There are material risks associated with investing in private placements, Delaware Statutory Trusts (“DSTs”) and real estate securities including the potential loss of the entire investment principal, illiquidity, tenant vacancies impacting income and revenue, general and real estate market conditions, lack of operating history, interest rate risks, competition, including the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and investors should read the PPM carefully before investing paying special attention to the risk section. This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation. Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services offered through Concorde Asset Management, LLC (CAM), an SEC registered investment adviser. Legacy Investments & Real Estate is independent of CIS and CAM.