Opportunity Zones
Cress Capital was at the forefront of the Opportunity Zone (OZ) program following its launch in 2017 with the Tax Cuts and Jobs Act. In 2018, Cress partnered with Raj Capital to form RevOZ Capital, an award-winning Opportunity Zone investment company which raised a series of Opportunity Zone funds and helped capitalize over $1 billion of Opportunity Zone projects throughout the U.S.
Today, Cress Capital invests directly and indirectly in Opportunity Zones. Directly Cress invests in primarily industrial development and redevelopment properties in the Western U.S. Indirectly, Cress invests in development projects led by best-in-class, third-party operators across the U.S.
Opportunity Zone Program
Qualified Opportunity Zones (QOZs) were created to spur economic development by providing tax benefits to investors who invest capital gains in Qualified Opportunity Funds (QOFs) within 180 days of the date such capital gains would have otherwise been realized, in the following three ways:
Deferral
Tax on the original capital gain is not recognized immediately and is deferred until the investment is sold, or December 31, 2026, whichever comes first. If the investment is not sold before December 31, 2026, any remaining deferred gain is recognized at that time and taxed at the current income tax rates.
Reduction
If the original capital gain is invested in a QOF prior to January 1, 2022 and held for 5 years, the investor can reduce their deferred capital gains tax liability by 10% through a step-up in basis.
Elimination
Investors can permanently eliminate taxation on any capital gains that accrue after their investment into a QOF if the investment is held for at least 10 years. This is due to an increase in the basis of any investment held in a QOF for 10 years to 100 percent of its fair market value on the date it is sold or exchanged.
OZ Expertise
The biggest challenge for emerging developers who want to build in opportunity zones are the guidelines’ nuances. The rules are complex and very technical so quality advisors and partners who think commercially but have sound technical know-how are crucial.
Ryan Parkin, Founder & Managing Partner
Commercial Property Executive, February 2020