Can "opportunity zones" be used with search funds?

searcher profile

January 28, 2019

by a searcher from Harvard University - Harvard Business School in Kansas City, KS, USA

Has anyone done any research on how buying a business that resides or owns the real estate within an opportunity zone impacts the search economics? Could the tax advantages be applied to the acquisition cost to benefit the buyer or seller?
If you don't know what I'm talking about, here's an article: https://www.wellsfargo.com/the-private-bank/insights/planning/wpu-qualified-opportunity-zones/

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commentor profile
Reply by a professional
from William Mitchell College of Law in Minneapolis, MN, USA
If the capital used to buy the business is qualified, it may get the OZ benefits. Certainly buying/improving or building real estate can qualify. Given the positive tax impacts of the OZ program, it has to have a positive effect. The tax advantages wouldn't impact the seller, unless somehow the sales price or mechanics are tied to the tax benefits...after 10 year holding period. The buyer of a business, if OZ is available, gets the immediate tax deferral and all the eventual tax reductions or eliminations. That might mean the buyer is willing to pay more for the business given the long term tax benefits...but I wouldn't count on that.
commentor profile
Reply by a professional
from Walsh College of Accountancy and Business Administration in Detroit, MI, USA
The tax advantages of an opportunity will impact your economics if you meet all of the requirements. Check out our Webinar on Opportunity Zones - https://www.plantemoran.com/explore-our-thinking/events/2018/12/opportunity-zones-opportunity-for-impact-and-traditional-investors-alike
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