Greenberg Glusker on Maximizing the Benefits of Opportunity Zones

Schuyler (Sky) Moore, Partner at Greenberg Glusker, is best known in Los Angeles for closing high-dollar, cross-border deals. He is valued among dealmakers for his concise communications, willingness to quantify risk, and ability to get complex deals to the finish line as fast as possible.

Sky’s deep expertise in tax and corporate law led him to publish the e-book, “The Tax Joys of Opportunity Zones,” in which he details what constitutes an Opportunity Zone and how best to utilize this federal tax incentive in relation to CRE.

What are opportunity zones and as a CRE broker, how can I use Opportunity Zones to help my clients?

Opportunity Zones are designated low-income areas in the United States.  They can easily be located with maps found on Google.

You can use Opportunity Zones to help your clients by (a) advising clients with property in an Opportunity Zone of the increased value of their property, and (b) advising investors of the tax benefits of investing in an Opportunity Zone.

 What are the tax incentives for investing in Opportunity Zones?

Investing in an Opportunity Zone Fund (a “Fund”) provides enormous tax benefits to any taxpayer that has recognized capital gain (a “Gain”), namely:

1. Tax on the Gain (including the 3.8% net investment income tax) is deferred until the earlier of (i) when the interest in the Fund (“Fund Interest”) is sold or (ii) December 31, 2026.
2. Ten percent of the deferred Gain is excluded entirely if the Fund Interest is held for five years, and 15% of the deferred Gain is excluded entirely if the Fund Interest is held for seven years.
3. There is NO tax at all on a sale of the Fund Interest (other than the deferred Gain) if the Fund Interest is held for ten years and the entire Fund Interest is sold.

Can you provide a real-life example?

We handled the largest Opportunity Zone to date in California, which is a double hotel complex being built in Oakland, entirely financed by investors rolling over capital gains.

What can you tell us about the traction in Opportunity Zone development (in CA, SoCal, etc.) and its significance?

It is having a huge immediate impact by increasing the value of property in Opportunity Zones and by spurring investment activity there.