Opportunity Zone Magazine Opportunity Zone Magazine Volume 1, Issue 1 | Page 81
INVESTOR CONSIDERATIONS WHEN INVESTING IN QUALIFIED OPPORTUNITY FUNDS
In addition, a well-formulated investment strategy will
distinguish the insightful fund manager and make it more
compelling to the appropriate investors even if the fund
sponsor may not have an extensive track record. A fund
sponsor should convey that the investment strategy may
not issue the same gross returns as conventional real estate
investments but may outpace other investments when
calculated net of tax. OZ Funds are also ideal for socially-
conscious investors who require a certain amount of
investment return combined with sustainable, economic
impact.
Finally, it is important to remember the intent of the OZ
program – to revitalize low-income and economically-
distressed communities with private capital injections. For
this reason, investors should ascertain that the investment
strategy is capable of producing risk-adjusted returns while
simultaneously contributing to the long-term advancement of
the community.
EXIT PLANS
The OZ Program has three tiers of deferred capital gains
tax reduction by which investors can benefit. Investors who
invest within a 5-year term will be able to reduce 10 percent of
original deferred capital gains tax. Investors who invest within
a 7-year term will be able to reduce 15 percent of original
deferred capital gains tax. Investors who invest within a 10-
year term will be able to eliminate the entire deferred capital
gains tax invested.
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