Frequently Asked Questions

We’ve got answers to the most commonly asked questions about utilizing your capital gains taxes for opportunity fund participation. Please browse the list below and feel free to contact us with any specific questions you may have.

What is the process?

Individuals who are realizing a capital gain across all asset classes can invest those monies on a tax deferred basis, as long their gain is invested in a qualified opportunity fund within 180 days of the sale or exchange.  The process is very easy:  agree to subscription agreement, transfer funds, receive stock certificate and tax statement.  The whole process is usually completed within 48 to 72 hours.

In certain situations where an individual is facing the expiration of the 180 day window we can expedite the process to same day.

What are the investment restrictions?

The capital gains must be invested in qualified opportunity funds that have a minimum of 90% of their assets invested in qualified opportunity zones.

How do I qualify?

Investment in Propel Opportunity Fund is limited to Accredited Investors (as defined by the SEC).   Capital gains on the sale or exchange of real estate, stocks, bonds, or other similar assets to an unrelated party, invested in the fund within 180 days of their sale, are eligible for the tax benefits.

Is there a minimum investment requirement?

The minimum investment in the Propel Opportunity Fund is $100,000.

Can I put my 1031 money in?

Yes. Opportunity Funds are designed to be easier with less hassle than 1031 Exchanges.

What can I invest in?

Real estate and businesses within a Qualified Opportunity Zone qualify for favorable tax treatment, with the caveat that they must be owned by a Qualified Opportunity Fund.  Direct investment in a business or real estate does not qualify.  Qualified Funds structured as REITs, partnerships and regular corporations are all permissible.  The Propel Opportunity Fund has a corporate REIT structure, meaning that you own stock and are investing in all of the company’s assets, which provides diversification of assets across locations and property types.

How do I invest?

We try and keep the process simple and painless, while at the same time ensuring we are doing things “by the book.”  If you have capital gains to invest, there is a link to “Get Started” at the bottom of most pages, or simply call us.  You will need to review the Offering Memorandum and Subscription Agreement that we will provide, and we will need to verify that you are an Accredited or Institutional Investor.  Once you have reviewed the documents, you will sign the Subscription Agreement and wire your investment funds to the REIT’s investment account.

How long is the investment period?

The program allows for a stepped-up basis depending on the holding period. A 5-year hold will grant the investment a 10% stepped up basis. A 7-year hold grants the investment an additional 5% of stepped up basis, totaling 15% on the original basis. Finally, after 10 years, investors permanently avoid federal tax on any gains from the opportunity zone fund investment.

What is the investment rollover period?

Investors have 180 days to invest realized capital gains.

Do I have to use an intermediary, like I would in a 1031?

No. Unlike with a 1031 exchange you can take receipt of the gains without using an intermediary, as long as you reinvest within 180 days. As an Opportunity Fund we have to certify with the IRS. You receive a tax statement at the end of the year.

Do I have to pay the original deferred taxes?

In part. The original taxes are deferred until December 31, 2026 (or the date of a sale, whichever is earlier). Investors will have to recognize a portion of the deferred gains that year. Investors may benefit from the step up in basis at years 5 (10%) and 7 (another 5%) if they reach either holding period before December 31, 2026.

Where are the opportunity zones?

Opportunity zones have been designated by the governors of each state and are located in all 50 states and Puerto Rico.

Are all designated opportunity zones economically distressed?

No. Opportunity zones must meet certain criteria to qualify. Census tracts with over 20% poverty and median family income no greater than 80% of the area medium will qualify. There are also contiguous zones, which are census tracts that are adjacent to a designated opportunity zone, and also do not exceed 125% of the median family income of that same opportunity zone.

Can I put new money besides capital gains?

New monies can be invested in an opportunity fund, however the investor would not enjoy the same tax benefits as they would on realized capital gains.

What happens to my money if a project within the fund fails, there is economic turmoil, or the markets change?

These are all very real risks. Real estate investments within the Propel Opportunity Fund carry the same market risk that comes with other investments. Over the long-term, we like real estate as an asset class because it is tangible, and each property has unique characteristics that add or detract from its value.  And real estate as an asset class has a long track record of success, with appreciation rates that historically have kept pace with or exceeded inflation (though certainly not every year). Like other investments, the investments within the fund are subject to economic and market changes, and in fact, the fund’s 10-year investment period means a greater chance of the investments living through a market cycle. One of our primary goals as fund managers is to manage risk.  We are not able to predict the future and we cannot eliminate all risk, but we seek to control the parameters within our control through a methodical investment decision making process coupled with an attentive management strategy.  Ultimately it is up to each investor to determine whether they are comfortable with the investment risk.

Let Us Help

Have questions?  Call today to visit with one of our friendly, knowledgeable fund specialists, or click on the button below to request our detailed offering summary and offering memorandum, or to submit questions or schedule a call. We look forward to speaking with you.

830 Mulberry Street, Macon, GA 31201
Phone: (770) 500-6013 | Email: invest@propelopfund.com