The document discusses federal opportunity zones which are designed to incentivize long-term investments in low-income communities. Key points include: - Opportunity zones provide capital gains tax benefits to investors who invest unrealized capital gains into qualified opportunity funds. The benefits include tax deferral, partial forgiveness, and total forgiveness depending on length of investment. - Qualified investments include new businesses and real estate development projects located in designated low-income communities. A minimum of 90% of the funds must remain invested for 10 years to qualify for the full tax benefits. - Major metropolitan areas like Atlanta contain multiple designated opportunity zones offering the potential to positively impact local economies and generate returns for long-term investors. Open policy questions

1. Atlanta PERIMETER
DISCLAIMER: The information provided here is not investment, tax or financial advise. Please consult with licensed professionals for such
matters.
COMPILED BY
M. Inam Ullah
FEDERAL OPPORTUNITY ZONES

2. 2

3. 3
Qualified Zone
Characteristics
32%
Average
Poverty
Rate
$59K
Average
Household
Income
35M
Residents
6%
Job Loss from
2011 to 2015

4. 4
The Basics
Capital gains from
“ANY” asset:
Real
Estate, Stocks, Bonds,
Jewelry, Art, Crypto
Currency, etc.
Fund needs a
vehicle:
Corporation or a
Partnership
New investment
can be:
Real Estate or any
“QUALIFIED”
business

5. 5
“Unqualified” Businesses
All property and businesses are considered qualified
investments EXCEPT:
Golf Courses
Massage
Parlors
Liquor
Stores
Casinos
Country
Club
Hot Tub
Facility
Sun Tan
Facility
Racetrack

6. 6
Funds Can Be Used For
Constructing a
NEW Real Estate
facility (residential
or commercial)
Start a NEW
Business
Buy and
SUBSTANTIALLY
IMPROVE EXISTING
Real Estate OR
Business

7. 7
“SUBSTANTIAL
IMPROVEMENT”
EXISTING REAL ESTATE PURCHASE
Total Purchase Value $1M
Value of Land $400K
Net Real Estate Value $600K
Additional Investment Needed $300K
EXISTING BUSINESS PURCHASE
Total Value of Business $1M
Additional Investment Needed $500K
30 months to
substantially improve
1
2
3

8. 8
Other Conditions
LOCAL
BUSINESS
ACTIVITY
REQUIRED
INVESTMENT
REQUIRED
SELF
CERTIFICATION
Minimum 50% of
the revenue has
to be generated
from within the
Zone
• IRS announced self-
certification process
• Self-certification
form to be attached
to tax return (Form
8996)
• 90% investment
in Zones
• 50K minimum –
No maximum

9. 9
Metro Atlanta Federal Zones

10. 10
Federal Capital Gain Tax Benefits
3 STEP BENEFITS
21 3
Tax Gain
Deferral
Partial
Forgiveness
Forgiveness
of
Additional
Gains

11. 11
Benefits - Timeline
Must invest
within 180
days of Capital
Gain
Realization
AFTER 5 years
but BEFORE 7
years, pay cap
gain tax on
90% capital
gain (10%
Waiver)
AFTER 7
years, pay tax
on 85% of
capital gain
(15% Waiver)
All such
investments
are taxed on
Dec 31, 2026
REGARDLESS
INCREMENTAL
capital gain on
investments in
these funds – if
left untouched
for 10 years –
will have ZERO
“NEW” capital
gains tax

12. 12
Opportunity Zone Incremental Benefit
6.00% 6.00% 6.00% 6.00%
8.08% 7.95%
7.71%
9.08%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
5 Year 7 Year 12/31/2026 10 Year
Standard After Tax IRR Total IRR
23.8% Tax Rate 5 Year 7 Year 12/31/2026 10 Year
Standard After Tax IRR 6.00% 6.00% 6.00% 6.00%
Incremental OZ Benefit 2.08% 1.95% 1.71% 3.08%
OZ Investment IRR 8.08% 7.95% 7.71% 9.08%
Percentage Increase 35% 32% 29% 51%

13. 13
3.08%
2.96%
2.74%
2.61%
2.25%
2.09%
1.91%
1.74%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2018 2019 2020 2021 2022 2023 2024 2025
IncrementalIRR
Year of QOF Initial Investment
Perishability of Incentives

14. 14
Profitable Investment
Return After 10 Years 68% 139%

15. 15
Expected Investment
Unrealized Gain in Public Hands - Cash, Stocks and Bonds, Other
Unrealized Real State Gain in Public Hands
Unrealized Gains in Corporate Hands
TOTAL AVAILABLE TO BE REALIZED
“Minimum” 2% is expected to be realized by 2020
80% is supposed to be real estate investment
So Far (My Rough Estimate)
$2.3T
$2.0T
$2.0T
$6.3T
$126B
$101B
$25B

16. 16
Open Questions
50% Local Activity
Requirement - Will it stay?
Can a qualified fund construct a
new strip mall and use a location
to lease to an “unqualified”
business?
Is Bonus Depreciation allowed and
- Can Net Value be used for 50%
cost increment calculation?
What tax year will be used for tax
rate purposes (year 1, 5 or 7)
ANSWERS ARE EXPECTED IN MARCH 2019

17. 17
NEXT…
(Ongoing Research)
If you like me to share what I
find, shoot me an email or
text - I will send you my next
presentation (episode 2)
Inam@kw.com
678-978-4000
1. HOW DO WE BENEFIT?
2. WHERE ARE THE OPPORTUNITIES
FOR REALTORS?
3. WHAT TOOLS ARE AVAILABLE
FOR US?
4. HOW CAN WE BE ON THE
FRONT LINE OF THIS
OPPORTUNITY?