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If I buy the air rights of the adjoining Opportunity Zone, can my development benefit from the OZ tax incentive?


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  • Marko Belej
    July 26, 2021

    An acquisition of air rights by itself might not get you Opportunity Zone benefits, but it could be helpful, depending on your other circumstances. You cannot benefit from the OZ tax incentive unless your qualified opportunity zone business (QOZB) holds a sufficient amount of qualified opportunity zone business property (QOZBP). QOZBP is only tangible property and only if (among other requirements) substantially all of its use is in an opportunity zone. I understand that air rights are typically treated as real property, so that the rights could theoretically qualify as QOZBP. Another requirement in the case of unimproved real estate is that the QOZB must have an intention to improve the real estate by more than an "insubstantial amount" within 30 months after the date of purchase. Accordingly, under this rule, it doesn't appear that you could simply buy air rights, without having an intent to improve them. Finally, even if the air rights are treated as QOZBP, your QOZB needs to hold sufficient other QOZBP, so that the QOZB's QOZBP accounts for at least 70% of its tangible assets.

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