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For you and the community

What is a Qualified Opportunity Zone Investment Fund?

The Tax Cuts and Jobs Act of 2017 created Qualified Opportunity Zones (QOZs) to provide potentially significant tax benefits to investors who re-invest capital gains into long-term investments in communities designated for economic development.

 

This solution is useful for accredited investors who have substantial capital gains, a desire to realize them in a tax-efficient manner, and a commitment to socially-impactful investments.

Individuals

Including foreigners with US Tax returns

Family Offices, Trusts & Estates

Corporations

C Corps

S Corps

REITs

Partnerships

Who Is Eligible to Invest in an Opportunity Zone?

Eligible investors include anyone who recognizes capital gains for the purpose of Federal Income Tax:

Types of Gains Eligible for Opportunity Zone Benefits

Nearly any kind of capital gain can be rolled over into an Opportunity Zone Investment. Gross gains are eligible; no need to net losses. Capital gains need to be invested in a QOZ Fund within 180 days of the sale (or the taxable year end of the partnership in case of K-1's.

Stocks And Bonds

Short and long-term capital gains on stocks, bonds and options

Stock Options

Exercise of employee stock options or vesting of restricted stock

Real Estate

Gain from disposition of real estate, including personal residence

Business Sale

Gain on sale of a business

Partnership K-1s

Gain allocated from a partnership on a K-1

Bitcoin

Sale of other property (e.g. art, bitcoin)

Section 1231 gains

  • Gains from sale of tangible property used in a trade or business were initially required to be netted against Section 1231 losses

  • However, gross gains can now be used to invest in a QOF

Gross gains

  • Investors commit gross gains (no need to net out losses)

  • Investors may have eligible gains even with tax loss harvesting at the end of the year

Carry forwards

  • Investors may ‘activate’ a loss for this year by committing any gains to OZ, and carry the loss forward indefinitely (and carry back five years if investing as a corporation)

  • Provides additional tool for tax planning –no ‘wash rule’ for gains

Year-end Tax Considerations

Three Basic Conditions of the Opportunity Zone Program

Well Aligned with GTIS Strategy and Experience

Opportunity Zones

GTIS Partners

Invest in designated Qualified Opportunity Zone locations

8,700 Census tracts covering a variety of underserved areas

The QOZ Fund is a direct continuation of GTIS investment strategy and focus on areas undergoing transformation

 

OppZone experience–over $180m of equity commitments prior to QOZ program; First ‘original-use’ project realized in March 2021

Invest in ground-up development or substantial redevelopment

Cannot simply acquire existing cash-flowing properties

GTIS team and strategy focused on ground-up development since the firm’s inception in 2005

 

In-house development capabilities plus JVs with 30+ local development and construction partners

Hold investment for a minimum of 10 years to deliver long-term benefits to the community

Maintain QOZ certification status, complex reporting requirements

Tax abatement is fair compensation for the long-term hold – QOZ is not a strategy, just a tax structure

 

GTIS has an established fund management platform investing on behalf of the world’s largest pension plans and wealth managers with extensive reporting, institutional-style fees and governance

Watch our Keynote at the
Opportunity Zones Summit

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