Published: November 26, 2024 | Read Time: 3 Minutes

Qualified Opportunity Zones (QOZ) were established in a 2017 tax bill to boost economic growth across the United States. Seabrook happens to be located in one of these designated areas with ideal properties to take advantage of the tax breaks associated with QOZs. Recently, Seabrook Real Estate’s CFO, Jeff Gundersen, and Amicus Law Group attorney and partner at Capstone CPA, George Munro, got together to explore not only what QOZs are but how they can benefit buyers.

Take a look at the recap below and listen to the podcast episode for the full scope of why purchasing in a QOZ makes for a savvy long-term investment: Unlocking Real Estate Potential: How QOZ Can Help You Buy A Beach Home

What is a QOZ?

Photo Credit: OpportunityZones.com

QOZs exist all throughout the United States, where the government encourages investors to develop or improve properties by offering attractive tax incentives. Buyers who invest in a property within a QOZ and meet certain requirements can enjoy significant tax benefits, including a potential tax-free exit after ten-plus years.

How It Works In Seabrook

To leverage the tax perks of a QOZ, there are several requirements to meet. Here’s a simplified breakdown from start to finish on purchasing a new construction home in Seabrook under the terms of a QOZ:

• Make sure the property is new/has never depreciated
• Obtain capital gains (stock, business sale, real estate, etc.)
• Form two LLCs, a parent (QOF) and a subsidiary (QOZB) within 180 days
• Complete registrations with the State of WA, Dept of Rev., IRS, Operating Agreement
• Complete registrations with the State of WA, Dept of Rev., IRS, Operating Agreement
• Transfer capital gain funds into parent LLC
• Transfer parent LLC funds to subsidiary within 6 months
• Transfer QOZB 15% down payment from subsidiary
• Follow written plan on how funds are to be spent (furnishings, legal fees, accounting fees, etc.)

A quick note: To purchase a home in Seabrook, a 15% down payment is required. When purchasing using QOZ parameters, buyers are able to wait until the funds are in their QOZB before sending the down payment to purchase their home.

The Benefits of Owning New QOZ Property in Seabrook

Tax Breaks

The real benefits of a QOZ investment lies in the long-term tax advantages. After holding a property in a QOZ for ten years, buyers can sell it free of capital gains tax on any appreciation. For the term of the investment, buyers can also use depreciation of the property to offset taxes, as well. Details on just how this is attainable are outlined in the podcast.

An Onsite Hospitality Program

In Seabrook, a full-service hospitality program is offered that can completely manage a vacation rental property, from bookings to revenue management and maintenance. This makes it easy for owners to be as hands-off as they please while knowing their investment is performing the best it can for the term of the investment.

Key Considerations

QOZ investments require careful planning and professional guidance. Not only do buyers need a clear business plan for the property, there are also additional requirements to be aware of during the process like annual personal and business tax filings and asset management. And while the benefits are significant, buyers should be ready for the upfront and ongoing costs associated with maintaining the structure, such as professional accounting for tax filings. Make sure to consult a knowledgable attorney or accountant for more information on a QOZ investment.

Let’s Chat More About Seabrook and QOZs

Our onsite real estate team is there to answer any questions about purchasing a home in Seabrook! Give us a call or message us today, we're open seven days a week.

Want to know more about the ins and outs of the legal and accounting requirements? Message George Munro for more information.

For the full podcast, listen here: Unlocking Real Estate Potential: How QOZ Can Help You Buy A Beach Home

This information provided is for informational purposes only and should not be construed as tax advice. We are not tax professionals and we encourage you to consult with a qualified tax advisor, like George Munro, regarding your specific situation.