Certified Alternative Zone Funds provide a novel, tax-advantaged alternative for HNW buyers. Nevertheless, as a result of they’re so new, choosing QOZFs which have sound fundamentals and investor safeguards is essential.
Designed to revitalize economically challenged, low-income communities, QOZs use personal investments quite than taxpayer .
The upside for particular person buyers is evident; they will defer and scale back capital features taxes on all kinds of legacy belongings used as a supply of funding and exclude capital features taxes altogether on new QOZ investments. The problem for buyers, nevertheless, lies in choosing an acceptable QOZF through which underlying belongings won't solely generate passable returns however may even meet regulatory necessities essential to accrue tax advantages.
After the brand new tax legislation established QOZs, I acquired dozens of unsolicited, half-baked proposals from would-be QOZF sponsors, lots of whom lacked the required actual property expertise. A fascinating QOZF has a lot of hallmarks. Right here’s a 10-step roadmap to choosing a QOZF.
Paul Platkin is Chief Funding Officer, Hillview Capital Advisors LLC.
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