Investment and Fund Sponsorship in premier Opportunity Zone real estate
Development of low-income, workforce, and supportive housing
Rehabilitation and reactivation of historic buildings
Traditional ground up new construction real estate projects
What is an Opportunity Zone?
An Opportunity Zone is an economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation authority to the Internal Revenue Service.
What are possible investor benefits?
First, investors can defer tax on any prior gains invested in a Qualified Opportunity Fund (QOF) until the earlier of the date on which the investment in a QOF is sold or exchanged, or December 31, 2026. If the QOF investment is held for longer than 5 years, there is a 10% exclusion of the deferred gain. If held for more than 7 years, the 10% becomes 15%. Second, if the investor holds the investment in the Opportunity Fund for at least ten years, the investor is eligible for an increase in basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged.
Hatteras Sky has pioneered a way to combine opportunity zone investment, LIHTC tax credits, local housing incentives, and innovative construction methods to create high-quality and accessible housing options in attractive communities while delivering favorable projected returns. Development of these multifamily housing assets begins in Q1 2020.
What Is the Low-Income Housing Tax Credit Program?
The Low-Income Housing Tax Credit (LIHTC) program helps create affordable apartment communities with lower than market rents by offering tax incentives to the property owners (not the tenant renting the unit). Properties may contain market rate units that are not financially assisted, in addition to reduced rent LIHTC units under a tiered rent structure.
What are possible investor benefits?
The LIHTC gives investors a dollar-for-dollar reduction in their federal tax liability in exchange for providing financing to develop affordable rental housing. Investors’ equity contribution subsidizes low-income housing development, thus allowing some units to rent at below-market rates. In return, investors receive tax credits paid in annual allotments, generally over 10 years.
Hatteras Sky has years of experience leveraging state and federal tax incentives to finance the rehabilitation and reactivation of historic structures.
What is a Rehabilitation Tax Credit?
The Tax Cuts and Jobs Act, signed December 22, 2017, affects the Rehabilitation Tax Credit for amounts that taxpayers pay or incur for qualified expenditures after December 31, 2017. The credit is a percentage of expenditures for the rehabilitation of qualifying buildings in the year the property is placed in service.
• Requires taxpayers take the 20-percent credit ratably over five years instead of in the year they placed the building into service
• Eliminates the 10 percent rehabilitation credit for the pre-1936 buildings
A transition rule provides relief to owners of either a certified historic structure or a pre-1936 building by allowing owners to use the prior law if the project meets these conditions:
• The taxpayer owns or leases the building on January 1, 2018 and at all times thereafter
• The 24- or 60-month period selected for the substantial rehabilitation test begins by June 20, 2018
Hatteras Sky develops in multifamily, hospitality and office products in top metro areas. Even where no tax incentives are involved, we develop top-quality commercial real estate using a conventional capital stack, including equity from institutions, high net worth individuals, and family offices.
Our team is currently working on the pre-development or development stages for three multi-family projects in Seattle, Phoenix and Los Angeles; seven hospitality projects in Los Angeles, Atlanta, Salt Lake City, Asheville, N.C. and Myrtle Beach, S.C.; and two office projects in Atlanta and Asheville, N.C.View Current Portfolio