December 31, 2021, is the last day for a rare tax benefit that Qualified Opportunity Zone investments offer—a 10% reduction on certain deferred capital gains taxes. Since many qualified investors earned healthy YTD returns in equity markets this year and are facing capital gains taxes, demand is surging to take advantage of CrowdStreet’s newly launched QOZ Fund III, with a December 28 close date, to get capital invested before the end-of-year deadline. Details for this fund can be found here.
The QOZ program was created by the 2017 Tax Cuts and Jobs Act to encourage long-term investment in low-income communities. By investing capital on or before December 31, investors can take advantage of the QOZ programs’ most immediate benefits: deferring capital gains tax liability until December 31, 2026 and reducing tax liability on those original gains by 10%. Total capital raised for Qualified Opportunity Funds, as tracked by Novogradac, rose 15.8% between 2Q21 and 3Q21 to a total of $20 billion, suggesting investor confidence in the strategy.
For investors who do not take advantage of the December 31 deadline for a reduction on deferred capital gains taxes, opportunity zone investments can still be an attractive option until the program ends in 2026. QOZs will eliminate taxes on any capital gains realized from the investment after a 10-year holding period.
CrowdStreet, the nation’s largest online real estate investing platform for accredited investors, will reach a significant benchmark this year as it approaches $1.2 billion in funds raised for investment in 2021 alone, bringing its total amount of invested capital to more than $2.8 billion since its inception in 2014. With its propensity to help generate long-term income and appreciation and generally low correlation to stocks and bonds, commercial real estate has long been considered an inflation hedge and offers portfolio diversification.
To date, the company has launched over 560 private equity real estate investment opportunities across the U.S., including both individual assets and funds. Some of the world’s largest sponsors, including Greystar and Harbor Group International, have used CrowdStreet to raise capital. The CrowdStreet investor community has earned more than $360 million in distributions.