We Provide Attractive Alternative Tax Planning When a 1031 Exchange Fails
If your 1031 exchange cannot be completed you may still defer capital gains tax with our publicly traded qualified opportunity fund, Park View OZ REIT (OTC: PVOZ).
A Flexible Alternative to 1031s
If your 1031 has failed you can still defer your capital gains liability with a qualified opportunity fund (QOF) investment, which offers significant capital gains deferral and elimination benefits. Importantly, QOFs also have far less rigid qualification requirements. Let us help you defer taxes through Park View OZ REIT’s publicly traded qualified opportunity fund shares.
A QOF investment can often defer capital gains tax when a 1031 exchange does not work out. The rules for executing a successful 1031 exchange are complex. Investors cannot take personal possession of the sale proceeds – the properties being exchanged into need to be identified within 45 days, and the purchase must be completed within 180 days. If the exchange is not carefully planned in advance, the exchange can become ineligible for 1031 tax deferral benefits. Luckily, none of these restrictions apply to QOF investments. This means QOFs are frequently called upon as a backup plan when a 1031 exchange cannot be used to defer a capital gains liability.
About Park View OZ REIT
Park View OZ REIT (stock symbol: PVOZ) is the only Qualified Opportunity Fund (QOF) to offer the convenience and accessibility of public stock ownership. We offer investors and 1031 exchange practitioners unique options to enhance tax efficient portfolio construction.
The fund’s core focus is investing in residential multifamily properties located in designated qualified opportunity zones. Attractive areas to invest in are those with strong population and employment growth, which favors warm weather and low-tax states.
Why Choose Us
Park View OZ REIT is designed to allow investors convenient access to the significant tax incentives offered by QOFs. Additionally, our unique public stock structure allows the powerful QOF tax benefits greater tax planning utility.
We have:
- Removed any minimum or maximum holding periods
- A low minimum investment of $10,000
- Eliminated the complication of K-1 tax forms
- Low fees and no sales commissions
- No investor accreditation requirements so anyone can participate
Are you ready to see if Park View OZ REIT can enhance your financial and tax planning strategy?
Are you ready to see if Park View OZ REIT can enhance your financial and tax planning strategy?
Q&A
How qualified opportunity fund (QOF) tax incentives help investors when a 1031 strategy cannot be completed.
What if the investor voids their 1031 by taking possession of the sales proceeds?
QOF rules do not have the requirement that sales proceeds be segregated. Also, the cash does not need to be the same funds being reinvested. The investor remains eligible to defer their capital gains liability with a QOF investment for 180 days from the date the capital gain was realized.
What if the investor hires a qualified intermediary (QI) to segregate the sales proceeds but are unable to identify a replacement property within 45 days or close on the new property within 180 days?
If the QI releases the funds after 45 days, the investor would still be eligible for a QOF deferral for another 135 days (180 – 45 = 135). If the funds are held by a QI into a new tax year, whether it be for 45 days or 180 days, it is possible to claim installment sale treatment by filing IRS form 6252. This moves the investor’s capital gain realization date to the date the QI released the funds and restarts a fresh 180-day investment eligibility window for a QOF deferral.
What if an investor accidently voids a 1031 by filing a tax return before the exchange is complete?
Under 1031 rules the 180-day period to complete the exchange can be prematurely terminated if tax returns for the year in which the gain occurred are filed. This can disqualify a taxpayer who, for example, has a capital gain late in their tax year with the intent of deferring it with a 1031. They might have a capital gain in November and be planning to defer the tax with a 1031 that will close in May. If they filed their tax return on April 15th, they will have prematurely ended their 180-day window and voided the planned 1031. The filing of a tax return does not affect the investor’s eligibility to defer their capital gain liability with a QOF investment. Under QOF regulations investors are allowed to amend their tax filings.
What is a qualified opportunity fund (QOF)?
A qualified opportunity fund is an investment vehicle that is organized for the purpose of investing in qualified opportunity zone properties. The IRS keeps track of investment opportunity zone tax incentive compliance through QOFs. A QOF needs to have at least 90% of its assets invested in tangible qualified opportunity zone properties to stay compliant.
What are the two tax incentives offered by a QOF?
1. Almost any type of capital gains liability can be deferred until the QOF is sold or December 31, 2026.
2. After holding a qualifying investment in the QOF for 10 years, any capital gain achieved by the QOF can be eliminated.
The second benefit is by far the most powerful. It allows investors to compound growth tax-free until you sell the QOF or 2047.
Who is eligible for QOF tax incentives?
Anyone who owes a capital gains liability to the U.S. government is eligible. You can be an individual living within or outside of the U.S. as well as a U.S. citizen or citizen of another country. Additionally, entities such as partnerships, trusts, corporations, REITs, and others can all qualify for benefits. In most cases, once the gain is realized, it must be invested into a QOF within 180 days, but there are exceptions and extensions to this rule. Importantly, unlike 1031 exchanges, you only need to invest the gain into the QOF to qualify for the tax benefit. The principal portion of your proceeds is free for any use.
What is the purpose of opportunity zone tax incentives?
The purpose of opportunity zones is to create a positive social impact by spurring economic growth and job creation in low-income communities designated as opportunity zones. It offers significant tax incentives for participating investors. States nominate communities for the designation, and the U.S. Department of the Treasury certifies that nomination. Opportunity Zones were created under the 2017 Tax Cut and Jobs Act. There are more than 8700 designated opportunity zones located across all 50 states.
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Schedule a free consultation to discuss how a QOF might be the right 1031 alternative for you.
These pages are prepared for informational purposes only and are not offered as legal, tax, or investment advice. All content provided is of a general nature and does not address the particular circumstance of any particular individual or entity. We encourage you to seek guidance regarding your individual financial needs from legal, tax or investment professionals. Investments, including our shares of stock, have inherent risks including the risk of principal loss.