Incredible Wealth Strategies Using Opportunity Zones with Ashley Tison

Ashley Tison

Interviewed 3/22/2022

My guest today is Ashley Tison. Ashley Tison is an attorney, founder of Opportunity Zone Professionals (OZPro), and strategy guru for OZPros. OZPros.com is a consulting firm that helps real estate investors, business owners, and other high net worth investors own qualified opportunity fund and qualified opportunity zone investments. They have invested in a number of products on their website to educate people on the complexities around Opportunity Zone strategy legislation so that they can implement it successfully. You can purchase the educational product and do it on your own or sign up for their Oz workgroups, a virtual working center where people interact with others and exclusive resources to learn about these exciting investment types.

We begin the episode with Ashley sharing his background story and why he chose his current profession. Ashley grew up in Indiana, played basketball, and ultimately ended up studying international business. After college, the job market wasn’t great, so he decided to go to law school to be an attorney. He practiced with big firms for five years and later got into in-house commercial real estate with a developer. When the commercial real estate market crashed, he went back to practice law and built up a mergers and acquisitions firm to help people buy and sell businesses. However, he sold the firm in 2017 because he got sick of seeing business owners who had built up big empires give almost 30% of it to the government. This led him to tax succession and mitigation planning, and along the way, he stumbled into opportunity zones. He loved it, and in 2018, he created a website, and within 2 weeks, he had 150 inbound inquiries and $75,000,000 worth of capital.

We then talk about how Ashley was able to build a successful business from a website without marketing. Ashley and his team were doing it as a test, and they didn't have videos on their first website, but they had done a little bit of a keyword search. The opportunity zone program aligned perfectly with his background, and he had to help people figure out how to do it and implement it themselves. To achieve his goal, he repurposed a software program that they had built for his law firm that allowed them to do a main street-level business transaction for a fixed fee. They launched it to work in the opportunity zone space and partnered up to become the legal zoom for this space. According to Ashley, for the legal zoom capability, you must have a fair knowledge of how to do the forms, which is a little bit complicated. So they ended up putting in robust products to teach people and walk them through on their website, which has been rewarding.

Next, we talk about what an opportunity zone is and the benefits that come with it. Ashley shares that Congress established opportunity funds and zone in the Tax Cuts and Jobs Act of 2017 to allow governors to designate up to 25% of their low-income census tracts all across the United States. When you invest in an opportunity fund, the first benefit you get is that you get to defer taxes until December 31st, 2026. There used to be a second benefit, which was a step up on the base after investing for either seven years or five years prior to the December 31st, 2026 deadline, but it expired in 2021. The third benefit is a permanent exclusion of capital gains tax via a step-up in base to fair market value. According to Ashley, for someone planning to build generational wealth, this is significant because it not only eliminates capital gains taxes but also eliminates depreciation recapture. So as a real estate investor, you can take any capital gains and invest them in a qualified opportunity fund and hold it for 10 years, and whatever you gain is going to come out tax-free.

We then discuss how you can take advantage of opportunity zones in real estate. Ashley shares that you can do it on any of your properties that happen to be in an opportunity zone. However, there are some requirements. You must have a substantial improvement of the asset which means you’ve to double the value of the building. So, if you buy a piece of property for $200,000 and the building itself is worth 50% of that, then you have to put another $100,000 into improving it. What you spend for improvement depends on the breakdown of what the building is worth versus the land. The opportunity zone tax act wants to make sure that people are not land banking on the opportunity zone. They want real investments. The good thing about it is that you don’t have to ask for permission from anybody, and there is no governing body that comes to check up on you. However, according to Ashley, when you don’t ask for permission, you must be prepared to provide a good audit trail to qualify.

Lastly, we talk about how you can find out if your property is in an opportunity zone. Ashley recommends that you do this at opportunity.com/map by plugging in your address. If you’re in an opportunity zone, it will pop up as blue. According to Ashley, to start your equity, you must have capital gains (you cannot use regular cash) and it has to go into a fund within 180 days. He recommends that you create a separate structure called Qualified Opportunity Zone Business (QOZB).

Make sure you don’t miss another amazing episode of the Just Start Real Estate Podcast with Ashley Tison and get valuable information on how you can build incredible wealth by investing in opportunity zones!

Notable Quotes:

“With a little bit of tax planning, intentionality, and foresight we can always reduce our tax bills when selling properties.”

Ashley Tison

“A qualified opportunity zone fund is a powerful tool for any investor who wants to build generational wealth.”

Ashley Tison

“When investing in opportunity zones, it doesn’t matter what the appraisal value ends up being. It matters what the building was worth at the time of purchase.”

Ashley Tison

“The good thing about opportunity zone investment is that there’s no governing body that comes to check your property, but you must have a really good audit trail to qualify for tax benefits.”