Currently Own a Home in an OZ and want to tear it down...

[Aaron Cater]

Thanks in advance.

The skinny....

-Bought a house for $150,000 a year ago in an OZ tract. Paid $30,000 down, out of cash. (Not capital gain)

-Bought it in my LLC's name, or maybe personal then moved it over, I cant remember. (Let me know if this matters)

-Have plans and a loan in place to demo in about two weeks, do a lot split, and build a duplex and a SFH. Already have leases in place for Aug 15th totaling $7,200.

-I have about $50,000 in unrealized capital gains sitting in my e-trade account and the stock market scares the hell out of me right now. 

-This got me thinking about flipping the plans and the project and the leases to someone else but I don't know if I have time for that due to the homes having to be ready by Aug 15th, as they are student housing. (Nice, student housing, its crazy what these kids live in) 

So two questions:

1. Can I use my $50,000 and do the teardown, lot split, and rebuild in my own Opportunity Fund? 

2. Just for my knowledge, does only the capital gain used in the process get the tax treatment after holding for ten years? If I invest $50,000 and use $450,000 in debt then sell for $1,000,000 in ten years is $50,000, $100,000 or all of the gain tax free?