Does lending into an opportunity zone project carry any of the tax treatment, or only an equity stake
Say a local sponsor is building 22 townhomes inside a designated tract and offering a $400k second position piece at 12 percent over a three year term to an investor sitting on roughly $260k of stock sale gain with the reinvestment window still open. The question worth working through is whether putting that money in as a loan gets any opportunity zone treatment, or whether the deferral only attaches if the investor takes an equity interest in the fund itself. Sponsor materials that talk about OZ benefits to investors without distinguishing debt from equity are worth pressing on, because that language often glosses over a distinction that matters a great deal to the lender's own tax position. The second piece worth separating out is what happens to a lender's position if the fund itself loses its qualification. That is generally the borrower's exposure rather than the lender's, since a debt position sits outside the fund's qualified opportunity structure, but it is worth confirming in the specific deal rather than assuming it across the board. A 12 percent coupon over three years can be a perfectly sound loan on its own terms. The mistake to avoid is treating a debt position as if it were carrying a deferral it was never structured to carry.
