Opportunity Zone Interview with Mark Politi

Interview with Mark Politi on Raising Capital with Qualified Opportunity Zone Funds for Businesses & Real Estate

US Treasury, SBA, HUD and the IRS designed Opportunity Zones Tax Guidelines to Incentivize and Unlock Capital Gains Investment and Spur Economic Growth and Job Creation across the United States

Interview with Mark Politi on raising capital with Qualified Opportunity Zone Funds for Businesses & Real Estate. US Treasury, SBA, HUD and the IRS designed Opportunity Zones Tax guidelines as big part of the 2017 Jobs Act to incentivize and unlock capital gains investment and spur economic growth and job creation across the United States. This bipartisan economic stimulus tax incentive has largely been misunderstood and dismissed by households and corporations skeptical of its legitimacy. They are missing out on one of the biggest tax breaks in US history.

Mark Politi is a nationally recognized speaker and expert on Qualified Opportunity one Funds.

Interview with Mark Politi

What are Qualified Opportunity Zones and What is the Market Potential?

Question:  What are Qualified Opportunity Zone Funds?

Mark Politi: As part of the new IRS tax laws enacted as part of the 2017 Jobs Act, $6.1 trillion in unrealized capital gains are being unlocked ($3.8 trillion are held by American households and $2.3 trillion are held from US corporations). Opportunity zones are designated (by state and local government) geographic regions of cities across the United in typically low- and middle-income areas of the country. Many areas have had trouble attracting any kind of investor capital.

Question: If I am a capital gains investor, what is in it for me by investing in an Qualified Opportunity Zone Fund and will I be able get rid of my Capital Gains tax bill?

Mark Politi: If an investors invest in qualified opportunity zone funds, whether it’s in real estate or business specific funds (non-real estate), the investor can postpone of the current capital gain tax payment until December 31, 2026 and a complete elimination of the future capital gains earned on that opportunity zone investment if they hold onto it for 10 years or longer. The complete elimination of future capital gains invested in an opportunity zone investment is a big deal and many investors are missing out on it.

Question: Why would a business want to create, develop and launch their own Qualified Opportunity Zone Fund to raise capital for their business or real estate instead of going the traditional route to Venture Capital?

Mark Politi: Instead of pleading with friends, family, business colleagues, VC’s and others to invest in your business or real estate project. Opportunity Zone tax incentives are only available for accredited investors who have a current capital gain tax liability. You cannot not offer these tax incentives to a regular investor. The Treasure Department, SBA, HUS and the IRS have provided businesses and real estate firms with these unique Opportunity Zone tax incentives to attract these capital gains investors to redeploy their investments into Opportunity Zone Fund investments by giving them these unique tax breaks that no one else can get.

Question: Are there active capital gains investors out there, especially during the COVID19 Pandemic and would they be interested in investing in my Opportunity Zone Fund that we set up?

Mark Politi: From February 2020 to May 2020, over $700 Billion in personal capital gains were taken by investors seeking to exit from their investments. Where did they go? They have up to 180 days to deploy their capital gains by investing in a 1031 Exchange (a Real Estate Sale), where they only postpone the capital gain that will still be owed to the IRS in the future. Or if they took capital gains from stock, many did not realize that they could leverage Opportunity Zone Tax incentives from their stock sale to minimize their capital gains liability and eliminate future capital gains as long as it’s held in the Qualified Opportunity Zone Fund for 10 years.

Question: If I were an accredited investor at the Top tax bracket and let’s say I have a $1,000,000 capital gain from the sale of Real Estate or Stock, what may be my capital gains tax liability and what are my options in investing in an Opportunity Zone?

Mark Politi: Whether it was Real Estate or a stock sale that resulted in a $1,000,000 capital gain, you could receive the following by investing in a Qualified Opportunity Zone Fund.

1) You can postpone your Capital Gains tax bill until December 31, 2026.

2) At 6 year mark, you would pay a 10% reduction (Step Down in Basis), so you would be taxed on $900,000 not $1,000,000.

3) If you held the investment in that Qualified Opportunity Zone Fund for 10 years or longer, you would have Zero Capital gains when you exited the investment.

4) The same investment with the same rate of return in a non-opportunity zone fund investment, would have a 23.8% Capital Gains tax bill due at the 10 year mark. So, in this example, on $1,000,000 the capital gain investor would owe $238,000.

Question: Is it difficult or complicated to Raise Capital and launch your own Opportunity Zone Fund?

Mark Politi: Because of the complexities of the Opportunity Zone guidelines that were just recently updated as of December 2019, Business and Real Estate executives and their executive management teams have been seeking expert guidance on how to correctly create, develop and launch a Qualified Opportunity Zone Fund. We have launched over 70+ Opportunity Zone Funds in Real Estate, Technology, Oil & Gas, Co-Work, AI, Ecommerce, Retail, Building, and many other industries. We consult and guide our clients through the whole process and continue to advise them before, during and after the capital raise throughout the life cycle of the fund.