All Forum Posts by: Tanner Crawley

@Angela Rhoton I am not familiar with any restriction in the amount of the fund you can control. I'm not a CPA but am involved with OZones myself. You can certify a single member LLC as a fund so I don't see how an equity restriction would make sense. The main thing you should keep in mind is that you have to use Capital Gains to purchase the property in order to receive the tax benefits.

@Isaac Pyle  
You will probably have to venture quite a bit out of the Boulder area. Have you got prequalified to identify how much you can afford? Have you determined specific goals? Cash flow, IRR, etc?

@Jason Thomas
Probably not. If your purchasing funds aren't capital gains there are no benefits. It is pretty different than a 1031. You also need to make substantial improvements so if it isn't a significant redevelopment you will not qualify.

@Wyatt Degaine
Welcome to Denver!
I would consider selling it. As your primary home, you save on capital gains. I would consider using a little bit of leverage. Maybe buy a property FHA here in Denver, and then purchase an investment property elsewhere.

@Mike Roy @John Kwon
You do have to substantially improve the property. However, it is not 100% of the purchase price. You can subtract the land value.

So the formula is (Purchase price-land value=substantial improvement amount). It still sounds like the property you have in mind John may not qualify.  

You can also only get the benefits if you are investing capital gains. 

@Lynette D Nickleberry
Hi Lynette, I have a lot of experience working with Modulars. I used to work for a developer in Flagstaff that built these units. We build STR's in Sedona and Williams using Modular Construction. They can be as beautiful as you would like and appreciate just like a SFH. Here is one of the units we built:
https://www.airbnb.com/rooms/30563562?location=Williams%2C%20AZ%2C%20United%20States&adults=1&guests=1&s=ZEcEAkNk

 I would argue investing in a professionally managed fund is probably less risky than doing any real estate investing yourself. There are plenty of QOF's with professional operators funding developers with Billions of $ of experience. 

@NA Wilkerson
There are some pros and cons to Ozone investments. The biggest pro is that you can own the property until 2047 and sell it, realizing the capital gains with no tax. 

The biggest con is that you will have to pay the initial gain in December 2027. It is deferred until then, but comes due. So unlike a 1031 that lets you defer gains indefinitely, the Ozone deferral comes due. However, it also comes with a 15% tax reduction in the form of a basis step-up after 7 years. The tax exemption is only for the investment going forward. So any gains incurred after the Ozone investment is made will be tax-free. 

Ozones also come with certain rules that can make it challenging if you aren't a developer. You could always invest in a fund, but for someone who likes to find and control their own deals, it may not be ideal. 

@Tyler Hardy
ADU's are definitely more common than people seem to think. They are just expensive to build here in Denver. $150k is probably pushing it and I'm not sure you will be able to find a GC that can accomplish that. I'm currently working on a Modular unit as an ADU solution that might be affordable. ADU's are allowed in Co Springs and are much more affordable and easy to build. You could get one for 80k in 4 months.

With that 150k I would make a downpayment on a property in Cosprings, build an ADU and have 2 more units. You can also STR down there so that is a plus.

@Marc Andrew
Interesting questions. We need some CPA's in here. Why don't you just 1031 or opportunity zone and avoid capital gains all together?