A Historic Opportunity
Saxum seeks to provide its high net worth and family office investors with superior risk-adjusted returns through its tax-advantaged Saxum Opportunity Investment Vehicle, which focuses on development projects throughout the Northeast and Smile States. Saxum has been uniquely positioned to leverage this historic tax-incentive opportunity and has been leveraging the program on behalf of its investors since its inception. Saxum is considered a thought leader for the Opportunity Zone (OZ) Program as the 3rd fund in the US to launch and being recognized as the Top 25 Opportunity Zone Fund Mangers & Developers in 2019 and 2020. Saxum recognized early that not all Opportunity Zones are created equal and that a distinct first mover advantage exists to secure high quality, impactful developments to provided appropriate risk adjusted returns to investors.
Strategic Objectives
The OZ Program was established by Congress with overwhelming bi-partisan support as an innovative approach to spurring long-term private sector investments in designated census tracts in need of capital investment. The two principal objectives of the program are to unlock and leverage the estimated $6 trillion in unrealized capital gains held by U.S. investors and to redeploy those proceeds into underinvested designated tracts through a highly tax-efficient mechanism called Opportunity Zones.
Investment Incentives
Investors may defer capital gains taxes up to seven years on the sale of any existing asset including stocks, bonds, real estate, operating businesses, art, etc. Deferred taxes may also be reduced over time by 10% if redeployed by 12/31/2021 into an Opportunity Zone Fund. Capital gains taxes due from new gains associated with investments made in an Opportunity Zone Fund would be eliminated if held for 10 years.
Tax Incentives
| Deferral of Original Investment Capital Gains to the Earlier of the Fund Sale or 12/31/2026 | Reduction of Original Investment Capital Gains Taxes | Tax Treatment of Opportunity Zones Investment Vehicle Capital Gains | |
| 5 years |  |
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| 7 years | |
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| 10 years | |
|
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Returns1
| Traditional Investment | Opportunity Zones Investment Vehicle | |
| Capital Gain | $1,000,000 | $1,000,000 |
| Less: Capital Gain Tax (23.8%) | (238,000) | - |
| After-Tax Investment Basis | $762,000 | $1,000,000 |
| Year 10 Value (assumes 7% annual Investment appreciation) | $1,498,969 | $1,967,151 |
| Less: Deferred Taxes on Invested Gains Due 12.31.26 |
- | (202,300) |
| Less: Year 10 Capital Gains (23.8%) | (175,399) | - |
| After Tax Return | $1,323,571 | $1,764,851 |
| OZ Investment Outperformance: 44.1% | ||
1OZ Investment Vehicle assumes all OZ tax incentives which include federal tax deferral to 12/31/2026 on harvested gains, 15% step-up in basis and the elimination of all federal taxes on capital gains due to a 10-year hold vs. the Standard Portfolio which is taxable in line with the current federal tax code”
Recent Opportunity Zone InfoOpportunity Zone Podcast featuring Saxum's Chad DeBolt
"Learn what financial planners and real estate professionals are talking about in regards to one of the most historic tax incentive investment vehicles in decades on The Pallas Perspective Podcast. Timing could not be better to get educated given public market evaluations and anticipated future tax policy." |
Designated Zones
Thought Leadership
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Opportunity Zones: A Historic Tax-Efficient Mechanism to Leverage Real Estate
September, 2018 - It is our belief that we have just witnessed the passing of one of the most innovative and impactful bi-partisan sponsored tax legislations in recent history. While the impact will be wide reaching, it is difficult to fully appreciate the potential benefits that will be directly attributed to the Opportunity Zone Program, including economic growth, job creation, social impact, financial profit and increased future municipal tax revenues. Surprisingly the program remains relatively unknown to both retail and institutional investors despite the impressive opportunity surrounding the recent legislation. |
