Opportunity Zone Investment

What is a Qualified Opportunity Zone?

A Qualified Opportunity Zone (QOZ) is a designation created by the Tax Cuts and Jobs Act of 2017 to encourage investment in economically distressed communities. The program allows investors to defer and potentially reduce capital gains taxes by investing in Qualified Opportunity Funds (QOFs), which are investment vehicles that deploy capital into businesses or real estate projects located in designated Opportunity Zones.

Potential Benefits of Opportunity Zone Investing

Defer taxes on earned capital gains
Avoid paying federal taxes on your capital gains
What this may mean for you?
If you are facing a significant tax liability as a result of capital gains, investing in a Qualified Opportunity Fund may be worth exploring, provided you invest within a prescribed amount of time.

Eligible Gain Types

1. Sale of Stock

2. Sale of Real Estate

3. Sale of Business

Tax Benefits of Investing in Opportunity Zones

Depreciation Deductions
Significant depreciation deductions over the life of the project
Deductions generally equal 100% or more of investor cash investment within 5 years of the building being placed in service
Deductions generally around 3X an investor cash investment over the depreciable life of the building (30 years)
Depreciation Recapture
Depreciation Losses

How does this program work?

To defer a capital gain (including net §1231 gains), a taxpayer has 180 days from the date of the sale or exchange of appreciated property to invest the realized capital gain dollars into a Qualified Opportunity Fund, an investment vehicle that files either a partnership or corporate federal income tax return and is organized for the purpose of investing in Qualified Opportunity. The fund then invests in Qualified Opportunity Zone property.

Disclosures & Risks

An investment in Sterling Opportunity Fund 1 LLC (the “Fund”) will involve a high degree of risk and is suitable only for investors that have no immediate need for liquidity of the amount invested and can withstand a loss of their entire investment in the Fund. When analyzing an investment in the Fund, prospective investors should consider, without limitation, the following risks, and should also carefully review the more thorough discussion of risk factors and potential conflicts of interest contained within the Fund Documents (defined below).