QOZ Investments

What is a qualified opportunity zone?

Qualified Opportunity Zones (QOZs) were established in 2017 as part of a federal tax bill to encourage economic development across the United States. These designated areas allow investors to benefit from special tax incentives when they develop or improve property. Seabrook is located within one of these zones, making it an eligible location for QOZ investment.

The primary advantage of a QOZ investment is the long-term tax benefits. If a property is held for at least ten years, investors can sell it without paying capital gains tax on the appreciation. In addition, property depreciation during the holding period can be used to offset taxable income, adding another layer of potential benefit.

steps for a qoz investment in seabrook

To take advantage of Qualified Opportunity Zone (QOZ) benefits, certain requirements must be met. Below is a simplified overview of the process for purchasing a new construction home in Seabrook under QOZ guidelines:

-Confirm the property is new/has not depreciated

-Use eligible capital gains (from the sale of stock, real estate, a business, etc.)

-Form two LLCs within 180 days: a parent entity (QOF) and a subsidiary (QOZB)

-Register both entities with the State of Washington, Department of Revenue, IRS, and establish an Operating Agreement

-Transfer capital gain funds into the parent LLC

-Transfer funds from the parent LLC to the subsidiary within six months

-Make the QOZB’s 15% down payment from the subsidiary account

-Follow a written plan outlining how funds will be used (for example: furnishings, legal fees, accounting fees, and other approved expenses)

Note: Purchasing a home in Seabrook requires a 15% down payment. Under QOZ parameters, buyers can wait until funds are placed into their QOZB before submitting the down payment for their home.

QOZ Qualifying Properties

using qoz to invest in coastal real estate

Listen to the podcast episode with Seabrook Real Estate’s CFO, Jeff Gundersen, and Amicus Law Group attorney and partner at Capstone CPA, George Munro, to learn more about how purchasing in a QOZ makes for a smart long-term investment.

Qualified Opportunity Zone investments offer significant benefits but require careful planning and professional oversight. Investors should be prepared for responsibilities such as annual tax filings, asset management, and ongoing accounting needs. Because requirements can be complex, it is essential to consult with a qualified attorney or accountant to ensure compliance and maximize the advantages of a QOZ investment.

Want to learn more about the legal and accounting requirements of QOZ investments? Message George Munro for more information.

The information provided is for informational purposes only and should not be construed as tax advice. We are not tax professionals and we encourage you to consult with a qualified tax advisor, like George Munro, regarding your specific situation.

QOZ Investments

What is a qualified opportunity zone?

steps for a qoz investment in seabrook

using qoz to invest in coastal real estate

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