Interview with Real Estate Fund Manager Ryan Scott
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In response to the pandemic, the Treasury Department and Internal Revenue Service made waves when they announced the federal income tax filing deadline had moved from April 15th to July 15th. Alongside this announcement, the Federal Government extended the deadline for investors to place 2019 capital gains in tax-advantaged Opportunity Zone funds. For many investors, this could mean reducing your tax bill on July 15th, among several other more compelling tax breaks.
If you had capital gains in 2019 and are ready to pay that tax bill, you should consider investing in a qualified opportunity zone. Why? We asked Ryan Scott, an Opportunity Zone Fund manager, to answer two important questions on the minds of investors looking for creative approaches to mitigating capital gains taxes.
Question: Why should taxpayers shift their tax dollars to the Opportunity Zone space?
Ryan Scott: What we are recommending is shifting dollars that would be paid to the IRS based on a tax liability from a capital gain. This way, you are taking the government up on their offer to let you use that money to invest, make more money, and pay them back later. The government is actively looking for more investment to happen in these Opportunity Zones, so the program incentivizes taxpayers to invest their tax dollars today and pay the IRS in 2026. The great advantage of investing in projects like this is the government will also allow you to keep the money you make tax free after paying back the money they “lent” you interest free.
“The government is actively looking for more investment to happen in these Opportunity Zones, so the program incentivizes taxpayers to invest their tax dollars today and pay the IRS in 2026.”
Q: Why is now the right time?
RS: First and foremost, because of the tax deadline. After you pay 2019 taxes, it is too late to invest since you have given that money to the government. You only have a limited period of time to make this election and invest the capital gains into a qualified Opportunity Zone fund. Our next deadline is July 15th, so you need to consider making this play now or asking for an extension to determine if it is right for you. Second, I recommend investing in Opportunity Zone funds because this program is still not widely understood. As the word gets out, the land and projects will get inflated or harder to come by. Everyone will be noting their property is in a zone and asking a premium. At the moment, there still is a window for operators to have an information advantage. We’re enjoying this advantage in our local market in Northern Arizona. Finally, now is the right time because interest rates are making many deals attractive. The goal of Aspire and funds like it is to get into a lucrative long-term deal. Given the long-term nature of the program, interest rates are more important than with traditional ‘get in, get out’ development projects.
‘...you need to consider making this play now or asking for an extension to determine if it is right for you.’
Ryan’s inspiring work with Aspire Fund has encouraged a multitude of investors to take a chance on Opportunity Zones. Garrett Scott, an investor with the fund, shared his ‘WHY’ when it comes to Opportunity Zones: “For the past few years I’ve been looking for ways to diversify, but the taxes from selling stocks wasn’t something I could swallow. The Opportunity Zone program allowed me the ability to invest my gains in a way that would, first and foremost, be put towards supporting the greater community. The added tax-incentive bonus only encourages me to continue to invest in Opportunity Zones.” During his first project as a part of Aspire Fund, they were able to build five affordable homes on land which had been overlooked for years. This was important to Garrett because he wanted his investments to help make the community better. So far, in his first year, he has avoided a five-figure tax bill from capital gains and the fund is up double digits.
“For the past few years I’ve been looking for ways to diversify, but the taxes from selling stocks wasn’t something I could swallow.”
The IRS describes an Opportunity Zone as “an economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment.” Scott knows these Opportunity Zones are the biggest tax break of a generation and, with that in mind, he founded Aspire Fund to help the average Joe get the same tax break someone with more than a billion dollars in the market gets.
Ryan is encouraging people to invest in Opportunity Zone funds. He founded Aspire Fund out of his passion for the potential of Opportunity Zones to benefit both communities and investors. Aspire Fund provides investors with the opportunity to take advantage of once in a lifetime tax breaks, attractive returns provided from patient, thoughtful real estate development projects, and the personal reward from knowing investments go towards the improvement of underserved communities across the United States.