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How could we invest into an EB-5 project that is also in an opportunity zone and enjoy benefits of both programs?

Could we invest into an EB-5 project that is also in an opportunity zone? Are there any such projects or opportunities to invest into and how can we best find them?

  • Matthew Rappaport

    Matthew Rappaport

    Falcon Rappaport & Berkman
    May 23, 2019

    As long as you meet the requirements of both programs, there is nothing preventing a taxpayer from taking advantage of both. I am not currently aware of any projects that qualify for both.

  • Peter McNeil

    Peter McNeil

    Comprehensive Financial Solutions and Tax
    May 15, 2019

    Each program has its own set of rules. If your project satisfies both sets of rules, you can take advantage of both programs on the same project.

  • Kostas Poulakidas

    Kostas Poulakidas

    Taft Stettinius & Hollister
    May 11, 2019

    If your investor or project meet the requirements of both Opportunity Zone and EB-5 programs, the investor and project will qualify. We are currently working on a hotel project that is both in an Opportunity Zone and using EB-5 financing.

  • Justin Gardinier

    Justin Gardinier

    Habitas Opportunity Capital
    May 10, 2019

    There has been some chatter about EB-5 projects potentially supplementing the EB-5 capital with Opportunity Zone capital for those projects that fall within a designated OZ, so it's possible to invest both types of capital into the same project. That said, I am not convinced there is a material benefit for the investor to do so. The investments into the single project would likely be accomplished through two separate and distinct entities - a "new commercial enterprise" for the EB-5 funds and a Qualified Opportunity Fund for the OZ funds. This would therefore require two separate investments: the $500,000 required for an EB-5 investment would not likely count toward the capital invested in the OZ fund and therefore not qualify for the OZ tax benefits (i.e., you'd have to invest $500,000 plus some other amount of capital gains into the OZ fund). Most EB-5 investors don't have material U.S. capital gains and most OZ investors are already permanent residents or citizens, so they would not benefit from the EB-5 program. I doubt many, if any, project sponsors or fund managers would go through the effort to figure out a way for both investment types to be funded through a single entity to get both benefits. Furthermore, given that most EB-5 investments provide very little return to the investor (typically 0% to 1% annually), these investments would not permit the OZ investor to maximize the benefits of the OZ program because the capital gains earned during the 10-year hold would not be as substantial as they may be if the original capital were invested in a non-EB-5 investment that returned market-rate returns.

  • Blake Christian
    May 10, 2019

    Yes, you can invest in a project that obtains EB-5 and OZ benefits. I am not aware of a site that has combined projects.

  • Jay Gold

    Jay Gold

    Defer Gain
    May 09, 2019

    Interesting question. It seems very unlikely, as EB-5 would be attracting foreign capital while QOZ funds can only benefit people with U.S. capital gains.


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