All Forum Posts by: Austin Hendrickson

@Dan Oxman A straight cash investment into an OZ fund would give rise to no tax benefits, thus defeating the purpose of investing into an OZ fund. 

If you use a straight cash investment you do not have any tax-free potential. Capital gains must be used to get any tax-benefits.

I am working with OZ's pretty closely with the firm I am at, if you have additional questions feel free to reach out.

@Dan Oxman My last point about the requirement to use capital gains for the investment is correct - in order to get the tax benefits of OZ's the investment MUST use capital gains. Cash investments are allowed but dilute the tax benefits.

For example if someone uses $100k capital gains & $300k cash for an OZ investment then only 25% of the appreciation and depreciation are tax free. 

The capital gain deferral until 2026 & 15% reduction in capital gains apply to only capital gains as well.

I would recommend consulting with a CPA experienced in OZ's, there is a lot of misunderstandings floating around about OZ's.

I know a few people with properties they are thinking about selling there. I'll talk to them and shoot you an email.

Keep in mind any real estate investment in an OZ must be a new build or a significant renovation (put 100% of cost back into the building(s)) 

Turn key properties will not qualify. The investments must also be funded with capital gains.

If you are still looking for guidance on OZ's feel free to shoot me a PM. I have been heavily involved in these projects.

@Drew Y. more info on OZ's here if you are interested

https://www.biggerpockets.com/forums/51/topics/586...

@Gary F. here is a thread on OZ's

https://www.biggerpockets.com/forums/51/topics/586...

Some common mistakes are trying to go cheap, not vetting out contractors, paying contractors too much up front, not having contractors sign a contract when you accept their bid, not having enough of a cushion for unexpected repairs (there will always be something)

I know quite a few - I'll shoot you a PM

@Mark Kuster to qualify for the tax-exempt capital gain treatment in OZ's it would have to be a new build or significant renovation and capital gains would have had to been used to purchase the building through a QOZ Fund. So may not be applicable if you have already purchased it and the above requirements were not met.