QOZ Fund III

The minimum investment is $50,000.

We have closed on one asset, Biltmore Village in Asheville, North Carolina. It is located across the highest-performing multifamily project in the market and less than 0.5 miles from the vibrant Biltmore Village and near downtown Asheville. This project has also secured an 18-year tax abatement worth $4.5 million. There are several deals in our pipeline including assets in Austin, Las Vegas, Nashville and Tampa.

The earlier to occur of $200M raised or 12/31/2025.

Under the new Trump administration, we do expect the Tax Cuts and Jobs Act of 2017 to be extended. Currently, we do not know when this will occur or what it will entail but are monitoring developments.

Investors must be “Accredited” under Rule 501(a) of Regulation D. The Fund is offered via private placement and is not publicly traded. If you are a credited:

1. Complete a Subscription Agreement.
2. Be approved by the Managing Member.
3. Fund their investment upon receiving a capital call notice.

A capital gain occurs when you sell or dispose of a capital asset for more than its original purchase price (also called the cost basis). It represents the profit made on the sale of an asset. Generally, a capital gain from any source can qualify for the QOZ fund investment treatment and deferral. This includes short-term capital gains (held for one year or less; taxed as ordinary income), long-term gains (held for longer than a year, taxed at lower rates depending on income), section 1231 gains, and “unrecaptured section 1250 gains”. However, recaptured 1250 gains do not qualify.

The gains need not be generated from the sale of a “like-kind” asset.

In addition, if the capital gain is generated by a sale of the appreciated asset to a “related person or party”, then the gain does not qualify for deferral via reinvestment into a QOZ fund. Related parties and persons generally include:

• Immediate family attribution: Brothers and sisters (whole or half-blooded), spouses, ancestors, and lineal descendants are considered to be related parties. In-laws are not included as immediate family.
• The 20% Related Party Rule: Generally, this means that the seller of the appreciated asset generating the gain cannot own more than 20% of the acquirer of the appreciated asset.

Examples of Capital Assets include:

• Real Estate
• Stocks, Bonds, Mutual Funds, ETFs
• Cryptocurrency
• Cars, Art, Jewelry, Collectibles

• You will pay tax on the original capital gain but you can defer it until 2026
• You won’t pay capital gains tax on the appreciation of the OZ investment as long as you hold it for at least 10 years
• OZ Funds and the corresponding OZ tax benefits and regulations work for development deals but do not work for acquiring stabilized properties
• You only need to invest your capital gains, not the entire proceeds from the sale

In addition to the benefits of tax deferral (until Dec. 31, 2026) and tax exemption on appreciation of the capital gain investment (if investment is held for at least 10 years), there is a third benefit.

One of the most powerful benefits of QOZ investing, that depreciation recapture is excluded from US federal income tax. The benefit of a tax-free depreciation recapture provides taxpayers with the ability to generate revenues offset by depreciation during the 10 years the investment is held. Typically, this depreciation reduces tax basis by the equivalent amount and, at the time of a future sale, tax is applied recapturing the depreciation at ordinary income or capital gains rates. Under the Opportunity Zone provisions, however, the depreciation recapture and any appreciation in the asset is not subject to tax. For example, if an investor invests $100 into an asset that depreciates evenly over a 10-year period, that investor would be able to offset $10 of otherwise taxable income with $10 of depreciation deduction for 10 years. At the end of the 10-year period, the investor would have a tax basis of $0 in the asset. Thus, if the investor sold the asset for $200, the investor would recognize a gain of $200, which would be subject to tax at ordinary income rates or long-term capital gains rates, as the case may be. That same investment within a qualified opportunity fund could be sold tax-free from a US federal income tax perspective, which would exclude tax on both the depreciation recapture and the appreciation in the asset’s value.

An investment in a QOF also provides the investors the opportunity to refinance the investment and take a distribution of the refinancing without being subject to immediate US federal tax liability. For example, in year 1 an investor invests $100 into a qualified opportunity fund and those amounts are appropriately invested by the fund. In year 3, a bank provides the qualified opportunity fund a loan for $50, which is immediately distributed by the fund to the investor. The investor can use those funds for whatever purpose she chooses. Properly structured, the distribution of the proceeds generally should not trigger a US federal tax liability to the investor.

The fund will make three different types of distributions:

1. Distributions of refinance proceeds
2. Distributions of operating cash flow
3. Distributions for investor redemptions

Distributions of refinance proceeds

Considered “debt-financed” distributions, which shall be treated as a return of invested capital for tax purposes and not taxable.

Distributions of operating cash flow

Each investor is taxed based on their pro rata share of taxable income or loss passed through to them based on their pro rata ownership of the fund. We intend to begin making quarterly distributions of operating cash flow once the portfolio has been built, stabilized, and put into operation. While these distributions will technically be taxable, we expect property depreciation and other tax-deductible expenses to partially (or fully) tax-shelter distributions of operating cash flow.

Distributions for investor redemptions from the fund

QOZ fund investors are exempt from federal taxes on capital gains resulting from property sale and redemption proceeds, so long as the investor is in the fund for at least 10 years before redeeming or any properties being sold.

Note that while QOZ regulations allow for depreciation to be utilized to shelter, or offset, distributions of operating cash flow, investors who remain in the fund for at least 10 years before redeeming will receive a 100% step-up in basis upon redeeming from the fund. Accordingly, investors will not be subject to depreciation recapture upon redeeming so long as they do not redeem before being in the fund for at least 10 years.

If an investor chooses to redeem before being invested for at least 10 years, they may not realize any or all of the potential tax benefits offered by the QOZ investment. In addition, investors who redeem from Origin’s QOZ fund before 10 years would be subject to the equivalent of an “early redemption” penalty, which functions as a discount to the NAV of their account upon redemption. Refer to the Summary of Principal terms in the fund’s PPM for additional details regarding investor redemption and the discount schedule for investor redemptions made before 10 years.

If an investor chooses to redeem before December 31, 2026, it will be considered an inclusion event under QOZ regulations that will result in the investor being required to recognize the capital gain for tax purposes upon the redemption.

Federal Tax deferral through 2026: A taxpayer may elect to defer the tax on some or all of a recently generated capital gain if, within the 180 days beginning at the date the gain was realized, they reinvest all or a portion of the gain in a QOF fund. Any taxable gain invested in a QOF fund is not recognized for tax purposes until December 31, 2026 (due with the filing of the 2026 return in 2027), or until the taxpayer sells their interest in the fund, whichever occurs first. If the gain deferred through QOZ investment is a long-term gain, the deferred taxes due in 2027 will be at the prevailing 2026 long-term capital gain tax rate. This same logic applies to short-term capital gains realized and then deferred through QOZ investment. Federally tax-exempt appreciation of the QOZ fund investment: If the taxpayer remains invested in the QOZ fund for a total of at least 10 years, they then receive a 100% step-up in the cost basis of their QOZ investment upon selling their QOZ fund interest, and thus zero taxes on the capital appreciation generated by the QOZ fund investment itself. Other Important Notes: The tax on the capital gain that is reinvested into a QOZ fund cannot be deferred indefinitely. All QOZ fund investor’s deferrals extend through 12/31/2026 and become due in 2027. Moreover, depreciation recapture is also excluded from US federal income tax. The benefit of a tax-free depreciation recapture provides taxpayers with the ability to generate revenues offset by depreciation during the 10 years the investment is held. Typically, this depreciation reduces tax basis by the equivalent amount and, at the time of a future sale, tax is applied to recapture the depreciation at ordinary income or capital gains rates. Under the Opportunity Zone provisions, however, the depreciation recapture and any appreciation in the asset are not subject to tax.

The QOZ tax laws are Federal tax provisions. Not all states conform to the Federal QOZ deferral rules. California and North Carolina are examples of states that do not currently conform. Beginning with tax year 2021, New York State and City no longer recognize the tax benefits afforded under the federal QOZ tax laws either. Some states may also have their own QOZ programs that may be beneficial.

In general, the 180-day period begins on the day the gain is recognized by the taxpayer.

Special considerations for how the 180-day rule applies if the taxpayer receives their subject gains from an investment in a partnership or an investment in another type of pass-through entity:

• A Schedule K-1 is issued by a flow-through or pass-through entity, which could be a partnership, S corporation, or trust—any of which could have eligible gains that would be reported on a Schedule K-1 to their partners, shareholders, or beneficiaries.
• A taxpayer receiving the Schedule K-1 can choose to begin the 180 days to invest their eligible passed-through gains into a QOZ fund on any one of three following dates:
• The last day of the flow-through entity’s taxable year; or
• The same date the flow-through entity realized the actual eligible gain at the entity level, i.e., the same date that the flow-through entity’s180-day period begins; or

The due date for the flow-through entity’s tax return without extensions for the taxable year in which the entity realized the gain;

Special considerations for how the 180-day rule applies if the taxpayer will be receiving installment or earnout payments from a business sale:

• Each installment payment or earnout payment that the taxpayer receives will have a separate 180-day period. If the business sale occurred on March 1, 2023(for example) and the first payment was also received in 2023, the taxpayer’s 180-day period for that period would begin on the last day of the business’s fiscal year tax year in the year the sale occurred.
• Each subsequent installment/earnout payment would have a separate 180-day period that would begin the day that each subject installment payment is received.

Note that a taxpayer must first realize the capital gain before reinvesting some or all of that gain into a QOZ fund. The IRS considers a taxpayer to have “made the QOZ investment” on the date that the taxpayer wires the money for their investment commitment to the QOZ fund.

For RIC or REIT capital gain dividends, the taxpayer can choose to begin the 180 days on either:

• The last day of your taxable year in which they would otherwise recognize the capital gain dividend; or
• The date of the dividend distribution

It depends on the type of trust. Generally, revocable trusts are grantor trusts. The grantor pays the income and capital gain taxes generated by the trust, and thus, the capital gain passes through to the grantor’s social security number for tax reporting purposes. Accordingly, if a grantor trust realizes an eligible gain, either the trust or the deemed owner of the trust may make the election to defer recognition of the gain and make the qualifying investment.

In the case of a non-grantor or irrevocable trust, if the trust generates the capital gain, then the trust is the entity that will be considered to be the taxpayer. Accordingly, to make the eligible QOZ investment and receive the deferral, the trust itself would have to invest in the QOZ fund and the creator of the trust would not be eligible to defer the gain by making and registering the QOZ fund investment under their name and SSN.

To elect to defer tax on an eligible gain, a taxpayer or their tax preparer will first need to report the gain on the applicable IRS tax form for the taxable year in which the gain was realized, as per usual. The taxpayer or their tax preparer must also complete IRS Form 8997, Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments. Form 8997 requires details such as:

The date the investment into the QOZ fund was made (i.e. the date the investor wired their money for the investment to the QOZ fund)

• The $ amount of the QOZ fund investment that was made
• The legal name of the QOZ fund or entity invested in
• The EIN of the QOZ fund or entity

Note the Origin Opportunity Zone Fund III, LLC EIN is: 93-1653053.

Yes. If an investor has both gross gains and capital losses, the investor can choose to either let the capital loss offset the gain or defer some or all of the gain via an eligible

QOZ investment. If the investor chooses the latter, they could then carry the remaining net loss forward to the subsequent tax year.

Investors receive an IRS Schedule K-1 annually, detailing their share of the Fund’s taxable income.

If a QOZ fund investor passes away while still holding their QOZ fund interest, it does not trigger a taxable event. Their beneficiary steps into the shoes of the decedent investor and inherits the investment at the decedent investor’s basis. This means that the beneficiary does not get to step up their basis on the investment at the time of inheriting it. However, the 10-year clock on the minimum hold period to receive tax-free appreciation on the QOZ investment keeps ticking rather than restarting when the investment is transferred to the investor’s beneficiary. Once the decedent investor and their beneficiary have held the investment for a combined total of 10 years, the beneficiary gets a 100% step-up in basis upon liquidating the QOZ investment, resulting in zero tax liability on the capital gains that the QOZ investment generated over the 10 or more years. Example:

1. Investment is made in 2021.
2. Investor passes away in 2028 after holding the QOZ investment for 7 years and paying their deferred tax liability in 2027.
3. Investor’s beneficiary inherits the QOZ investment in 2028 at its fair market value with no step-up in basis.
4. Come 2031 or after, the investment will have been held by the investor and their beneficiary for a combined 10 or more years. Any time after it’s been held for 10 years combined, the beneficiary can liquidate the investment and once they do that, their basis in the investment will step up to the full fair market value at the time of liquidation, resulting in no capital gains tax liability to the beneficiary.

In the event the beneficiary sold the QOZ investment prior to the investment being held for a combined 10 years by the beneficiary and the decedent investor, then the beneficiary would owe taxes on all appreciation that was generated over the period the QOZ investment was held.

In the event the original investor passed away prior to December 31, 2026, or prior to paying the taxes on the deferred gain (due in early 2027), then the beneficiary of the QOZ investment would assume the deferred tax liability and would be liable for paying it by their tax payment deadline in 2027.

Investors in QOZ Fund III can expect:

• Comprehensive quarterly reports
• Annual audited financial statements
• Quarterly webinars with live Q&A – recordings will be sent to investors
• Regular updates to the QOZ Fund III page and Education Center.

An investment in the Fund might be beneficial to an investor who wishes to defer the tax liability on qualifying capital gains and who has a long-term investment horizon that will allow them to take advantage of the tax-free appreciation after a 10-year holding period.

Furthermore, an investment in the fund may be beneficial to an investor seeking to diversify an investment portfolio with a commercial real estate investment vehicle focused primarily on multifamily real estate and select real estate-related assets, seeking to receive long-term appreciation, seeking to preserve capital, and who is able to hold an investment for a period of time consistent with our redemption program and liquidity strategy. Potential investors who require immediate liquidity or guaranteed income, or who seek a short-term investment, are cautioned that an investment in the fund will not meet those needs.

If an investor chooses to redeem before being invested for at least 10 years, they may not realize any or all of the potential tax benefits offered by the QOZ investment. In addition, investors who redeem from Origin’s QOZ fund before 10 years would be subject to the equivalent of an “early redemption” penalty, which functions as a discount to the NAV of their account upon redemption. Refer to the Summary of Principal terms in the fund’s PPM for additional details regarding investor redemption and the discount schedule for investor redemptions made before 10 years.

If an investor chooses to redeem before December 31, 2026, it will be considered an inclusion event under QOZ regulations that will result in the investor being required to recognize the capital gain for tax purposes upon the redemption.