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If a vacant building located in an Opportunity Zone was purchased in November 2017 for future adaptive re-use development, can it still qualify under the existing purchasing LLC?

Can existing owners create their own QOF to develop the project?


Answers
  • Blake Christian
    May 29, 2019

    This presents a problem due to the date of acquisition. To "refresh" the properties' eligibility, the current owners would need to sell it to a new entity and then can only retain 20% or less. Otherwise the property is deemed non-qualified. You might explore leasing the property to a new entity and then improve.

  • Shawn Neidorf
    May 29, 2019

    I’m not a lawyer, but the statute says property must be acquired by the fund after Dec. 31, 2017. There are related-party rules that may affect property owners having their own QOF for investment in that property. I would ask an attorney for further details.

  • Matthew Rappaport
    May 28, 2019

    The existing LLC would need to file Form 8996 to elect status as a QOF, and all compliance requirements would apply.

  • David LeGrand
    May 28, 2019

    Yes, it is possible, but it requires careful structure. Probably a lease to a new OPZQBIZ.

  • Brett Siglin
    June 11, 2019

    There might be a way to structure around this scenario. There are many facets to each of these questions.

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