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Opportunity Zone funds for tax deferral


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I haven't seen any discussion on this board about Opportunity Zone funds, which seem like they should be a very valuable option for US taxpayers to defer capital gains. Here is a link with a decent explanation of how it works for the uninitiated:

https://taxfoundation.org/opportunity-zones-what-we-know-and-what-we-dont/

Basically when you have a capital gain of any kind you can defer that gain if you reinvest just the profit in an Opportunity Zone fund. In many ways it's much better than 1031 exchanges which are very popular with real estate investors as you don't need to roll the entire investment over to avoid taxes, but just the profit. It's also good for all types of capital gains, even short-term gains which are taxed at ordinary rates (often over 50% tax rate for people in high tax states). You have 180 days after the gain to make the investment, which for gains late in the year means you can even wait until the following year to make an investment and pull down your prior year taxable income, kind of like a super charged IRA contribution.

I've done enough research to know that a good opportunity zone fund would be a no brainer investment in my situation this year, but I don't have any leads on a fund that is actually any good. Does anyone on the board have any direct experience with these investments or recommendations of fund managers?

 

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The challenge is that an OZ fund requires so much capex that it is hard to find a deal that qualifies.  Is pretty much has to be ground up development.  If “ground-up development in an economically distressed area” sounds risky, that’s because it usually is.

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I talked to the guys at MRTI a couple of years ago. They were raising 2 OZ funds at the time. Haven't kept up, but the pitch sounded reasonable. I think their fund was called Maxus Opportunity Funds.

I used to own MRTI. It's done well. I wasn't completely comfortable with the management, but I know some who love the guy.

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