Case Study: Accessing Long-Term Gains With Opportunity Zone Funds

Discover how Breakwater Exchange helped a client preserve wealth, defer tax, and generate passive income in this case study. Learn how our approach creates long-term results.

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Leveraging New Oppurtunites With Tax Burdens: An Example

After selling their family-run construction business of over two decades, Breakwater Exchange’s clients found themselves at a financial crossroads. With a $3 million capital gain looming, their primary concern was how to avoid a substantial tax hit while still making smart, long-term investments. The couple had worked hard to build their business and wanted to protect their legacy while shifting from active management to passive income. Our team stepped in to explore sophisticated deferral strategies that could help them reinvest intelligently and preserve more of what they had earned.

Turning Capital Gains into Tax-Deferred Growth

By allocating $1 million of their proceeds across three well-vetted Opportunity Zone funds, Breakwater Exchange’s clients were able to defer capital gains tax and earn passive income. These investments were tied to tangible development projects in high-growth communities, offering long-term upside and built-in social impact.

The Outcome: Income Now, Eliminating Capital Gains Later

Roughly two and a half years after funding the QOFs, the underlying real estate developments were complete, leased, and fully stabilized. The client now receives annual distributions averaging 7%, a reliable income stream with none of the management burden they’d carried for decades. What’s more, by holding these funds for at least 10 years, they’ll eliminate capital gains from the business sale and QOF asset appreciation. Breakwater Exchange’s strategy and process provided peace of mind, real financial performance, and a legacy-level wealth plan.

Build an Efficient Tax Strategy With Breakwater Exchange

Breakwater Exchange can help you design a personalized Opportunity Zone plan. Reach out today and let’s craft a wealth strategy that works for both your portfolio and your tax future.

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FAQs About Our Opportunity Zone Fund Strategies

What types of gains can I defer using a Qualified Opportunity Fund?

Breakwater Exchange can help you defer capital gains from real estate, business sales, and other appreciated assets. We structure it to meet all IRS requirements.

How long do I have to hold the investment to eliminate gains?

Breakwater Exchange’s Opportunity Zone solutions are designed with a 10+ year hold strategy in mind. After this period, capital gains from the fund can be eliminated entirely.

Can I receive income from the Opportunity Zone investment?

Yes. Many of Breakwater Exchange’s QOF projects begin generating income within 24–36 months after stabilization. Our team and our esteemed sponsors vet every fund for potential yield and growth.

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General Disclosure
All investing involves risk of loss of some or all principal invested. Past performance is not indicative of future performance. There can be no guarantee that any investment or strategy will achieve its stated objectives. Speak to your tax and/or financial professional prior to investing.

Real Estate / 1031 Risk Disclosure
There is no guarantee that any strategy will be successful or achieve investment objectives; Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments; Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities; Potential for foreclosure – All fnanced real estate investments have potential for foreclosure; Illiquidity –These assets are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments;Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash ﬂow distributions; Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefts. Stated tax benefts – Any stated tax benefts are not guaranteed and are subject to changes in the tax code. Speak to your tax professional prior to investing.

Opportunity Zones Disclosures
Investing in opportunity zones is speculative. Opportunity zones are newly formed entities with no operating history. There is no assurance of investment return, property appreciation, or profits. The ability to resell the fund’s underlying investment properties or businesses is not guaranteed. Investing in opportunity zone funds may involve a higher level of risk than investing in other established real estate offerings. Long-term investment. Opportunity zone funds have illiquid underlying investments that may not be easy to sell and the return of capital and realization of gains, if any, from an investment will generally occur only upon the partial or complete disposition or refinancing of such investments. Limited secondary market for redemption. Although secondary markets may provide a liquidity option in limited circumstances, the amount you will receive typically is discounted to current valuations. Difficult valuation assessment. The portfolio holdings in opportunity zone funds may be difficult to value because financial markets or exchanges do not usually quote or trade the holdings. As such, market prices for most of a fund’s holdings will not be readily available. Capital call default consequences. Meeting capital calls to provide managers with the pledged capital is a contractual obligation of each investor. Failure to meet this requirement in a timely manner could elicit significant adverse consequences, including, without limitation, the forfeiture of your interest in the fund. Leverage. Opportunity zone funds may use leverage in connection with certain investments or participate in investments with highly leveraged capital structures. Leverage involves a high degree of financial risk and may increase the exposure of such investments to factors such as rising interest rates, downturns in the economy or deterioration in the condition of the assets underlying such investments. Unregistered investment. As with other unregistered investments, the regulatory protections of the Investment Company Act of 1940 are not available with unregistered securities. Regulation. It is possible, due to tax, regulatory, or investment decisions, that a fund, or its investors, are unable realize any tax benefits. You should evaluate the merits of the underlying investment and not solely invest in an opportunity zone fund for any potential tax advantage.