There are no U.S. Opportunity Zone federal tax incentives for non-U.S. taper investors; just normal investment elements.
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How can foreign investors benefit from the opportunity zone incentive?
I have some foreign born and foreign investors interested in acquiring and developing housing and businesses in our opportunity zone. Is there any way for them to benefit, as they're not investing capital gains, from the opportunity zone designation?
Answers
If the foreign investors don't have gains to invest, then there may be third parties who do and would be willing to invest in their project on terms favorable to them because of the tax benefit that the third parties will receive. If they want to take advantage of being in an OZ, then they generally will need to have an entity qualified as a qualified Opportunity Zone business (QOZB) to acquire the projects. Once their entity qualifies as a QOZB, then the third party investors could form a new LLC (a QOF), invest gains into the new LLC within the required 180-day period and have the new LLC invest the funds into the QOZB in exchange for additional equity. Note that the OZ deferral and exclusion benefits would be enjoyed by these third party investors, and the benefit to the foreigners would be only indirect, in the form of "cheaper" equity.
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