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Updated about 5 years ago,
Investing in Opportunity zone without a fund
I'm closing on a house next week that happens to be in an opportunity zone. I will be doing substantial work on the house - my rehab budget is larger than the cost of the house. I also have lots of unrealized capital gains in the stock market at the moment, so I'm trying to figure out how to take advantage of the OZ. I was planning on closing in my personal name so I could get a Fannie/Freddie loan when I go to refi in a few months. Everything I see on OZs talks about investing in a fund, however I don't want to invest in a fund - I want to invest directly in the property. So two questions:
1 - Can I buy the house as an individual using my using capital gains and defer the taxes, or must I create a QOF to purchase the house?
2 - If the answer to #1 is that I must create a QOF, then what's the simplest way to go about this? Since the QOF must file IRS form 8996 I assume it must file its own tax returns, so a disregarded entity like a single member llc will not be good enough. Do I need to create a C or S corp? What's the easiest way to do this given that I'll be using all my own money?
3 - Given that the answer to #2 is probably still somewhat complicated and time consuming, are there firms or individuals popping up yet who will do it all for me? (including filing the IRS forms, etc.)?