QOZ Fund III

The minimum investment is $50,000.

We have closed on one asset, Biltmore Village in Asheville, N.C. It is located across the highest-performing multifamily project in the market and less than a half-mile from the vibrant Biltmore Village and near downtown Asheville. This project has secured an 18-year tax abatement worth $4.5 million. Other deals in our pipeline include assets in Austin, Las Vegas, Nashville and Tampa.

When we have raised $200 million or Dec. 31, 2025, whichever occurs first.

With the Trump administration, we are optimistic that the Tax Cuts and Jobs Act of 2017 will be extended, but we do not know when this will occur or what a new version of the act would entail. We are monitoring developments.

You must be an accredited investor under federal Rule 501(a) of Regulation D. The Fund is offered via private placement and is not publicly traded. If you are accredited, you can take the following steps to invest:

1. Complete a subscription agreement.
2. Be approved by the managing member.
3. Fund your 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 or 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 (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

A 1031 exchange and a QOZ investment both offer tax benefits but differ in eligibility, investment flexibility and long-term tax treatment. 

For a comprehensive explanation, read our article: Qualified Opportunity Zones vs. 1031 Exchanges 

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), the third benefit of investing in a QOZ is that depreciation recapture is excluded from U.S. federal income tax.

A tax-free depreciation recapture allows taxpayers 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 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 (QOF) could be sold tax-free from a U.S. 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 investors the opportunity to refinance the investment and take a distribution of the refinancing without being subject to immediate U.S. federal tax liability. For example, in year one an investor invests $100 into a QOF. Those amounts are appropriately invested by the fund. In year three, a bank provides the QOF a loan for $50, which is immediately distributed by the fund to the investor. The investor can use those funds for whatever purpose they choose. Properly structured, the distribution of the proceeds generally should not trigger a U.S. 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

These are considered “debt-financed” distributions, which will 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 make 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, they 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 Dec. 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 Dec. 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 at least 10 years, they 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.

Keep in mind: 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 Dec. 31, 2026, and become due in 2027. Depreciation recapture is also excluded from U.S. federal income tax. Tax-free depreciation recapture allows taxpayers 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 Opportunity Zone provisions, the depreciation recapture and any appreciation in the asset are not subject to tax.

As of February 2025, not all U.S. states have conformed to federal Qualified Opportunity Zone (QOZ) regulations for state tax purposes. State conformity depends on whether a state’s tax code aligns with Internal Revenue Code provisions related to QOZs. Some states have fully adopted these provisions, while others have not, leading to differences in tax treatment at the state level.

States that don’t conform to federal QOZ regulations:

1. California: Does not conform to federal QOZ provisions. Investments in QOZs are subject to state taxation, meaning taxpayers cannot defer or exclude gains at the state level as they can federally.
2. Massachusetts: Has not adopted the federal QOZ provisions, resulting in no state tax benefits for investments in QOZs.
3. Mississippi: Limits tax deferral on gains to in-state QOZ designations. Investments in out-of-state QOZs do not qualify for state tax deferral.
4. New York: Does not conform to federal QOZ provisions, so taxpayers cannot defer or exclude gains from QOZ investments for state tax purposes.
5. North Carolina: Has decoupled from federal QOZ provisions, meaning state tax benefits are not available for QOZ investments.
6. Hawaii: Limits tax benefits to Opportunity Zones within the state. Investments in out-of-state QOZs do not receive state tax incentives.

In non-conforming states, taxpayers investing in QOZs cannot defer or exclude capital gains from state taxation, even though such benefits are available federally.

Investors need to consult with tax professionals or refer to specific state tax codes to understand the implications of QOZ investments on state taxes, as state-specific regulations can significantly impact the overall tax benefits of such investments.

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
• 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
• 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 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.

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 the taxable year in which they would otherwise recognize the capital gain dividend
• 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 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 Social Security number.

To elect to defer tax on an eligible gain, the taxpayer must report the gain on the applicable IRS tax form for the taxable year in which the gain was realized. They 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 QOZ fund investment was made (i.e., the date the investor wired their money for the investment to the QOZ fund)

• The dollar amount of the QOZ fund investment
• The legal name of the QOZ fund or entity
• The EIN of the QOZ fund or entity

For the Origin Opportunity Zone Fund III LLC EIN, please contact your dedicated investor relations professional.

Yes. If an investor has a net capital loss in a year that’s made up of a gross loss that outweighs a gross capital gain, the investor can still choose to defer the gross gain by investing it in a QOZ fund. They 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.

You will receive an IRS Schedule K-1 annually, detailing your share of the Fund’s taxable income.

If a QOZ fund investor dies 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. It does not restart when the investment is transferred to the 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. This results in zero tax liability on the capital gains that the QOZ investment generated over the 10 or more years. Here’s an example:

1. Investment is made in 2021.
2. Investor passes away in 2028 after holding the QOZ investment for seven 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. By 2031 or later, the investment will have been held by the investor and their beneficiary for a combined 10 or more years. At that point, the beneficiary can liquidate the investment. 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.

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

If the original investor dies prior to Dec. 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 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, they 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 Dec. 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.