BOSTON – With news of potential tax rate hikes and especially capital gains rates dominating the news, a new qualified opportunity fund launched by the Boston-based company Park View Investments attracts the attention of tax-conscious investors.
Park View Investments, an investment company specializing in Funding of areas of opportunity and Investments, today announced the launch of its investment product, the Park View OZ REIT (Opportunity Zone Real Estate Investment Trust).
Park View Investment‘s new fund addresses a need by offering investors and investment advisers a convenient and liquid way to benefit from tax advantages in areas of opportunity. Qualified investments in Park View OZ REIT have the advantage of accessing tax incentives in areas of opportunity through equities.
Founder and Managing Director of Park View Investments Michael kelley said, “We believe there are two important advantages to this form of ownership over investments in partnership units which currently dominate investments in Qualified Opportunity Funds (QOF).” He cites the following advantages:
1) Owning stocks is familiar and accessible to almost every investor. Investing in equities also removes many of the barriers that QOF investors typically face with partnership offerings, including notoriously difficult K-1 partnership tax forms, long capital commitments often of 10 years or more, requirements for accreditation, high fees and high minimum investments.
2) Stock ownership also greatly increases the usefulness of financial planning for QOF investments, as the investor can choose a holding period that best suits their unique financial situation. Shareholders can defer capital gains tax for a year or a few years before opting out, or they can choose to stay in the investment for decades, which is tax-exempt growth.
Kelley explained that until now, investors in Qualified Opportunity (QOF) funds have typically had to give up control over their holding period or overcome access issues created by partnered investments and often both. “We knew the industry had to change. Park View OZ REIT was designed to alleviate these problems while keeping costs low, ”he added.
The Opportunity Zones legislation was enacted as part of the Tax Cuts and Jobs Act (TCJA) at the end of 2017. There was strong anticipation that the QOF would be popular with investors. In this sense, the EIG Group and other QOF experts calculated that on an annual return of 7% or 8%, the QOF benefits would add the after-tax equivalent of 3% per year, which means that a QOF investment eligible could allow an investor to earn approximately 40% more year over year.
Significant benefits of Park View OZ REIT include:
· The capital gain obligation may be deferred until the sale of the QOF or until December 31, 2026, whichever occurs first.
· After a five-year hold, 10% of the original capital gain obligation can be eliminated.
· After having held the QOF for ten years, any capital gain realized by the QOF can be eliminated. This third advantage is by far the most powerful. It allows investors to dial tax-free growth until they sell QOF or 2047, whichever comes first.
· Income we pay in the form of dividends is eligible for the qualifying business income deduction which will reduce taxable income by 20%.
· The structure of REIT is very tax-efficient and is not subject to double taxation on income distributed to investors.
Park View OZ REIT invests in Opportunity Zone properties across the United States. Investors need a minimum of 100 shares or $ 10,000 to participate. The structure is very beneficial for long-term investors with capital gains, allowing all investors the opportunity to compose growth into a very tax-efficient investment with low fees. Since the QOF is structured as a Real Estate Investment Trust (REIT) and not as a partnership, investors have freely tradable shares, will not need to prove their accreditation, and will avoid partnership tax forms.
Kelley said, “The Qualified Opportunities Fund (QOF) tax incentives are a powerful financial planning tool. Investors with recent capital gains can benefit from significant tax advantages to reinvest their gains in low income areas through these opportunity areas, with goals of job creation and promotion of economic equality. This second generation of funds offers the accessibility and flexibility that financial planners need to realize the potential of this tax incentive as a go-to financial planning tool.
He continued, “As we watch the nationwide debate unfold over the proposed tax increases, what seems almost certain is that there will be increases, and the tax plans appear to be aimed at a increase in the rate of capital gains. An investment in the opportunity area is a strong hedge against these proposed increases. There are over 8,700 designated Opportunity Zones across the United States.
He noted that financial advisers work in a highly competitive industry and that the potential of a QOF to increase “after tax” returns by 3% makes it an attractive product in the market. He sees the product as beneficial to most financial professionals, including wealth managers, tax advisors and CPAs who offer their clients tax-saving strategies. Tax incentives from qualified opportunity funds can provide significant tax savings for any investor with recent capital gain, but for some people such as art collectors and those who use grantor trusts. irrevocable in estate planning, benefits are an essential part of financial planning.
He added: “Just as REITs opened commercial real estate investments to the general public over 60 years ago, structuring QOF as REITs with tradable shares opens up the benefits of QOF to a large investor base. wider. It will also inject much-needed capital into the communities that benefit most from the job creation that capital investment brings.
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