SEDONA, ARIZ./ FEBRUARY 28, 2019 (STL.News)
The U.S. Congress in the 2017 Tax Cuts and Jobs Act established a new community development program called Opportunity Zones. According to the Internal Revenue Service, “An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment.”
This tax-incentive program promotes funding of a variety of projects, inside of these zones. The Opportunity Zone Development Company formed by Witt helps taxpayers navigate this process and helps prepare projects targeted for zones to obtain funding.
“Timing issues are critical for Opportunity Zone Development. Having a team in place to get entitlements, prepare plans and establish realistic budgets is the main course when investing in Opportunity Zones and the better prepared the project sponsor is, the higher the likelihood of success,” said Witt, who has over 34 years of real estate and investment management experience. “My experience is helpful, and my contacts are gold for clients.”
The current estimate of unrealized capital gains in the United States is $6.1 trillion. This profit exists on paper, and the tax consequence of selling these assets is restricting the flow of capital for reinvestment. To illustrate, if an investor purchased 1,000 shares of Apple stock on January 4, 2003, their basis would be $1,000.00. After 14 for 1 in splits and an increase in stock price that $1,000 investment was worth $2,351,020.00 at the close on January 28, 2019. The $2,350,020 is unrealized gain until it is sold. The $470,004.00 capital gains tax would decrease the wealth of the investor after the sale and does impact the liquidity of capital in the marketplace. This incentive makes projects inside of Zones easier to fund. There are three main benefits to Investing in Opportunity Zones.
1: A deferral of tax liability until 2026. “Taxpayers,” Witt noted, “can invest in Opportunity Zone Funds or form their own funds to invest in Opportunity Zone projects and defer the tax liability until 2026.”
2: A reduction in taxable gain to the lessor of 85% of the gain or fair market value in 2026.
3: There is no capital gain on increases in value of the fund as long as the money has been invested in the fund for 10 years.
“The Opportunity Zone Development Company LLC was formed to help ensure clients get the maximum benefit from the investments,” added Witt. As with most opportunities, there are rules that need to be followed. “First, the investment must be made within 180 days of a statutory defined date,” Witt enumerated. “Second, the funds must be invested in an Opportunity Fund. Third, the Opportunity Fund must invest the funds in Qualified Opportunity Zone assets. Fourth, the Treasury wants these funds invested in projects sooner than later, so the funds must invest 90% of the capital within a maximum of 180 days from the date they receive the funds.”
The Opportunity Zone Development Company is presently working on a number of projects that will qualify for the funding. “This company is here to help in that process,” Witt stated. “Doing it right can provide significant benefits and help taxpayers retain and build net worth.”
“Trust is earned, not granted,” Witt concluded, “and earning trust for me is all about protecting clients’ net worth. I believe service is the key to success. Listening, identifying needs and meeting those needs continues to provide significant opportunities for above-average returns to partners and clients, and that’s why The Opportunity Zone Development Company was formed.”
About Robert Witt, The Opportunity Fund Development Company, LLC
Robert Witt is the President of the Beaver Creek Villas Condominium Association, Managing Partner of The Opportunity Zone Development Company, Managing Partner of Simonton Ranch Land Holding Company, Managing Partner of Verde Income Partners LLC. For more information, please call (928) 202-1000. He is located at 400 W Finnie Flat Suit 1C, Camp Verde Arizona 86322.