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Episode Summary
You’re staring at a triggering event in the next 12 to 24 months, and the capital gains bill is going to be the biggest check you ever write. Your CPA will run the numbers in April. Your banker is focused on the line. Nobody is asking what the proceeds are actually for before the wire hits. I brought Brian Forcier back (we did 1031 Exchanges a year and a half ago) because the Opportunity Zone provision in the 2017 Tax Cuts and Jobs Act is one of the more interesting tools I’ve seen for owners about to take a big gain who don’t have a plan for the money yet. Brian runs Titanium Partners and he’s deploying capital into these zones right now, including a 204-unit apartment build attached to Essentia’s billion-dollar healthcare expansion in Duluth. We get into how it actually works (temporary deferral, a stepped-up basis on a 5/7/10-year sliding scale, and the permanent exclusion of all appreciation after 10 years), where the trap doors live with blind funds and snake-oil sponsors, and why this is only ever the cherry on top of a good deal, never the reason to do one.
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## Top 10 Takeaways- Opportunity Zones defer any capital gain, not just real estate. Stock sales, business sales, even a rare coin collection qualify.
- Hold the new investment 10 years and you pay zero capital gains tax on every dollar of appreciation.
- The basis step-up scales by hold time: 5% at five years, 10% at seven, 15% at ten.
- You have to double your basis investment into the asset. They want fresh capital deployed, not cash flow recycled.
- Growth-oriented with 10+ years left, Opportunity Zones fit. Stabilized and exiting soon, the Milestone 6 — Transaction Value.
- Blind funds are where owners get taken. If you can’t see the asset and the rent roll, walk.
- Sell-leaseback your operating real estate, then redeploy the proceeds into a qualified zone investment to recapitalize the business.
- The deferral clock runs to December 2026. The investment window inside the program is the tighter constraint.
- Lock long-term rates on a 10-year hold. A three-year rate reset inside a ten-year hold is how the deal blows up.
- The zone benefit is the cherry on top of a good deal. It’s never the reason to do a bad one.
Sound Bites
“I don’t pay tax on that increase in value from 85,000 to a million. As long as I hold it 10 years or longer and sell it, I pay zero capital gains tax after 10 years. Zero.” (@TBD) — Brian Forcier
“If you’re a growth-orientated business, you’re in that phase cycle of your business or your career, absolutely, you should be looking at opportunity zones. If you’re stabilized but not growing, then it’s probably not for you.” (@TBD) — Brian Forcier
“It’s really kind of like a cherry on top of the investment is how we look at it.” (@TBD) — Brian Forcier
“Do not just jam something like this down your throat because you think it’s really cool. Make sure you have context of how this fits into the grand plan of your family wealth and for your growth and exit plan of the business and your real estate.” (@TBD) — Ryan Tansom
About This Episode
Brian Forcier is the managing principal of Titanium Partners, a boutique private investment advisory firm based in Duluth, Minnesota, focused on commercial real estate and operating company investment for high-net-worth and accredited investors across the Midwest. Brian has spent his career on 1031 Exchanges, asset management, and the deployment of capital into real estate that creates long-term wealth for his clients. This is his second time on the podcast (the first covered 1031 Exchanges in depth), and he came back to walk through Opportunity Zones because he’s actively using them inside large deals right now, including a 15-story, 204-unit apartment build attached to Essentia Health’s billion-dollar campus expansion in Duluth.
Resources Mentioned
- Titanium Partners — Brian’s firm. — titaniumpartnersllc.com
- Minnesota DEED Opportunity Zone Map — State map of qualified census tracts, available through the Minnesota Department of Employment and Economic Development.
- 2017 Tax Cuts and Jobs Act — The federal legislation that created the Opportunity Zone program.
- Prior episode with Brian Forcier on 1031 Exchanges — Referenced as the companion to this conversation.
- Conscious Capitalism — Referenced by Ryan in the context of patient capital and doing the right thing with profits in mind.
Connections
Phase + Module:
- Module 1 — Ownership Goals — Timing the triggering event and matching the tax tool to where you actually are in the cycle
- Module 2 — Expand Knowledge — Capital gains mechanics, deferral structures, and tax-optimized exit planning
Milestones:
- Milestone 6 — Transaction Value — After-tax proceeds and the structures that protect them
- Milestone 1 — Time & Role Goals — Where the 10-year hold horizon either fits your plan or doesn’t
Concepts referenced:
- Capital Allocator — The owner’s role in deciding where post-exit proceeds get redeployed
- Enterprise Value vs. Equity Value — The gap that tax structure either widens or narrows
- Value Gap — What the wire actually delivers after taxes versus what the headline price implied