Compound is qualifying as an opportunity zone business (QOZ business).
A few weeks ago, the IRS released additional clarification about opportunity zone businesses. As a result, it has become clear that our investors are eligible for the same capital gains tax benefits that they would receive on real estate investments in opportunity zones.
To learn more about Compound and opportunity zone businesses, visit our website here.
How will that work?
The NYC-based family office which seeded the Compound Manhattan Cityfund with its initial real estate portfolio also owns a building in a designated opportunity zone on Manhattan’s Lower East Side. Compound had been planning to move its office to the area upon completion of construction due to the neighborhood’s unique startup-friendly vibe.
An upside surprise!
Due to the recent IRS clarifications, we have learned that not only will Compound benefit from the lower overhead (and better lunch options) on the Lower East Side, but also our investors may benefit from this designation as well.
Why should you care?
Investors who invest their capital gains* in an opportunity zone qualified business are eligible for many tax benefits, including:
- Deferred tax on capital gains (from selling stock, real estate, art, cryptocurrency, etc.) until Dec 2026.
- Reduced taxes on the original capital gains by up to 15%.
- Elimination of any tax on all new capital gains if the investment is held for 10 years or more.
We are excited about this development for many reasons.
Compound’s mission is to reshape the real estate ownership landscape, enabling millions of investors who cannot afford to invest in the cities where they live, work and travel to own a piece of those cities in a frictionless way.
By locating our business in a QOZ, we underscore our commitment to reshaping the real estate investment landscape and turning the status quo on its head--not just because our investment products are so differentiated, but also because our office will be based in a part of the city that has missed out on the recent wave of skilled and technology job creation that has swept the rest of Manhattan and has been designated for investment by both the state and federal government.
*After selling an appreciated asset (it could be stocks, bonds, business, real estate, cryptocurrency, yacht, art, etc.), an investor must invest the gains into an opportunity fund within 180 days of the sale, or if the gain is from an investment in an LLC or LLP, from the end of the tax year of the entity. Investors may then elect to defer their gains at the time of filing their year-end tax returns.