QOZ CPA questions/recommendations Philly

[Mayer M.]

Hey All,

I have a few development projects in the QOZ zone in Philadelphia and need some cpa/tax/QOZ guidance.

All properties are owned in a single member LLC. The plan is to develop/rehab them and refi to get all my cash out. The costs of construction will far outweigh the cost of the land/structure. All properties were purchased in 2019. All are 2-4 unit properties.

Can I take advantage of the QOZ tax benefits? What do I have to do to make sure I’m compliant? I believe that if holding the property for a minimum of ten years the gain once sold is tax free is that correct? If The asset is fully deprecated by the time I sell does that mean the entire net from the sale is tax free?

So many questions......

Thanks in advance!

Mayer

Keywords: tax, cpa, accountant, opportunity zone, QOZ, Philly, Philadelphia

[Michael Skoczylas]

Lots of Questions here. 

The first question is really whether or not you have the capital gains to put into the QOZ Fund to take advantage of all of the benefits. You need to "re-invest" capital gains into a qualified opportunity fund in order to get all of the benefits. Once that threshold is behind you then you need to self-certify as a QOZ fund. While right now the certification is not very difficult, there are some bills in congress to require reporting on the social impact of the investment, and who knows what that will look like, but for now, the form is pretty simple. If held for 10+ years you get all of the benefits of the legislation and as you said, all of your gains would be wiped out if sold (actual language is that your basis is increased to the FMV of the property on the date of sale). If you have further questions, feel free to message me.