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Ariz. – A special visit and tour today by White House policy advisor and Small Business Administration regional director Ashley Bell focused on select Opportunity Zone properties being developed by Caliber within once-blighted downtown Mesa. We are honored to be able to host Mr. Bell in Mesa and to explain the history, context and future of the area as we use this powerful tax tool to drive innovation, create jobs and improve lives,” Caliber CEO Chris Loeffler said. The program provides tax incentives to investors that invest their capital gains into Federally designated Opportunity Zone areas and, under current guidelines, investors may defer tax on capital gains invested in Opportunity Zone investments until the investment is sold or until Dec. 31, 2026. The investor may also benefit by a step up in basis of 10 percent if the invested gains are invested for at least five years; and an additional 5 percent if the investment is held at least seven years, which means that the investor may exclude up to 15 percent of the original gain from federal taxable income at seven years.

At the forum, Schrader discussed the benefits of the opportunity zone initiative and gave predictions on the future of commercial real estate. As part of the Tax Cuts and Jobs Act of 2017, opportunity zones were created to spur investment in economically challenged areas. As one of the first real estate firms to capitalize on the incentive, Caliber currently manages their own $500 million multi-asset fund. During the event, panelists made it clear that Phoenix’s current commercial real estate market would continue to flourish as a result of the state’s thriving employment market.

Located off of Granite Reef Road in Scottsdale, Caliber’s Eclipse Townhomes are ahead of their time in regards to eco-efficient housing. Equipped with a multitude of innovative features like LED lighting, hybrid water heaters, Icynene spray foam, PEX plumbing, High SEER heat pumps, Energy Star Appliances, and cool roof technology, the townhomes were constructed with sustainability in mind. Ketan Patel, the CEO and founder of Naya Energy, said that by shutting off appliances for five minutes at a time continuously throughout the day, homeowners can lessen demand charges and conserve energy. And the best way to do that is while there’s hot water in the water heater, turn it off for 5 or 6 minutes at a time,” said Patel.

The final regulations amend the proposed regulations’ general rule that only capital gain may be invested in a Qualified Opportunity Fund (QOF) during the 180-day investment period by clarifying that only eligible gain taxable in the United States may be invested in a QOF. Aggregation of property for purposes of the substantial improvement test — QOFs and QOZBs can take into account purchased original use assets that otherwise would qualify as qualified opportunity zone business property if the purchased assets are used in the same trade or business in the Qualified Opportunity Zone (QOZ) or a contiguous QOZ for which a non original use asset is used, and improve the functionality of the non-original use assets in the same QOZ or a contiguous QOZ. The final regulations provide several refinements to the working capital safe harbor: - They create an additional 62-month safe harbor for start-up businesses to ensure that they can comply with the 70-percent tangible property standard, the 50-percent gross income requirement, and other requirements to qualify as a QOZB; - They provide that a QOZB can receive an extra 24 months to use working capital if the QOZ is in a Federally-declared disaster area; - They clarify that the safe harbor can only be used for a 62-month period and that amounts remaining at the conclusion of the period cannot be counted as tangible property for purposes of the 70-percent tangible property standard; and - They allow a QOZB to treat equipment, buildings, and other tangible property that is being improved with the working capital as QOZBP that is “used in a trade or business” for purposes of the requirement that a QOZB must be engaged in a trade or business. The final regulations provide an election for a consolidated group of C Corporations to treat a lower-tier QOF C Corporation as a member of the consolidated group if the only other members of the consolidated group hold 100 percent of the QOF member’s stock, and the QOF member complies with special intergroup transaction rules to remain a member of the group.