Virtua Partners Launches Tax Reform-enabled Fund

PHOENIX–Private equity real estate investment firm Virtua Partners has launched what it says is the first Opportunity Zone Fund — that is, a fund that will invest in these designated areas created under the Tax Cuts and Jobs Act of 2017 by taking advantage of the tax savings they were granted under the law.

Virtua Opportunity Zone Fund I aims to raise $200 million. It will primarily invest in residential rental property development — such as multifamily and single-family home rentals — hospitality and office. The geographical focus will be high growth sunbelt markets, such as Austin, Phoenix, Atlanta, Dallas, San Antonio, and Orlando.

What Are Opportunity Zones?

The tax reform measure allows governors of each state to designate Opportunity Zones, which are specific geographic areas eligible for tax-advantaged, long-term investment.  Virtua explains that investors in qualified opportunity zone funds receive a basket of tax benefits, including deferral of current capital gains, a tax reduction of up to 15% on current gains, and no capital gains taxes on appreciation if the investment is held for 10 years.

Like 1031s, They Benefit Investors

Virtua also said that under the tax law investors can defer and reduce capital-gains taxes when they reinvest profits into an opportunity zone fund within 180 days following the sale of a prior investment. It is similar to a 1031 exchange transaction yet unlike a 1031 deal an investor does not have to invest the entire previous investment.