What are the criteria for real estate and other tangible property to qualify as QOZBP?

Answers

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  Guy Nicio

  Windes

  September 05, 2019

  The first criterion is that the property must be located within the borders of a designated Opportunity Zone. Here are the other criteria: stock in a QOZ business; partnership interest in a QOZ Business; QOZ business property; acquired after Dec. 31, 2017; original use begins with QOF or it is substantially approved (i.e., increase improvements basis by 100%) During substantially all of the QOF holding period, substantially all of the use occurred in QOZ. Note: Original use means that it could not be depreciated by the current or any prior taxpayer or if a building, it was vacant for at least five years prior to the acquisition by the QOF. Please engage and consult a tax advisor for additional details specific to your situation as this is a complex tax law.

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  Peter McNeil

  Comprehensive Financial Solutions and Tax

  September 23, 2019

  Tangible property must be improved by at least $1 more than its cost.

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  Blake Christian

  HCVT CPAs

  September 05, 2019

  Generally, the property must have been acquired by purchase (generally) after 2017, the fund must be the original user of the property or the Fund/QOZB must "substantially improve" (i.e., double the tax basis via improvements) the property within 30 months of purchase and must be substantially used in the zone. If you own property in a zone that you acquired before 2018, then you would need to sell it to a QOF and retain a maximum of 20% of the QOF. Otherwise, you trigger the related party rules which disqualifies your gain for OZ reinvestment and also makes the property an ineligible QOZ business property.

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  Jonathan McGuire

  Aldrich CPAs and Advisors

  September 06, 2019

  For your building to qualify it must have all of the following criteria checked off. One, the building must be located in a zone and used in a zone for business purposes. Two, the property need be acquired by purchase from an unrelated party after Dec. 31, 2017. Three, the property must either have original use or be substantially improved. The original use definition, simplified, is essentially new property or new construction. Substantially improved means that after acquisition (which must be after Dec. 31, 2017), you must make improvements equal to the original cost you paid to purchase the building (excluding the land value).

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  Maria De Los Angeles Rivera

  Kevane Grant Thornton

  September 07, 2019

  To be QOZBP, the property must be: property purchased from an unrelated person after Dec. 31, 2017; property leased from an unrelated person after Dec. 31, 2017, or from a related person at arm’s length market rates; original use of the property commences with the QOF or when the QOF substantially improves the property; and during substantially all (90%) of the QOF’s holding period of the tangible property, substantially all (70%) of the use of the tangible property was in a QOZ

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  Matthew Rappaport

  Falcon Rappaport & Berkman

  September 09, 2019

  There are basically only two ways: original use or substantial improvement. Under original use, you have to be the first taxpayer to use the property in the zone (not the first one to use it at all). For real estate, this means any newly developed property or property that has been vacant for at least five years. But for tangible property, this could include relocated property or leased property. Under substantial improvement, your additions to basis must match or exceed original basis within a 30-month period. It's unclear whether this period begins on the date of acquisition or whether you can begin the period at a later date. But for real estate, this means gut renovation.

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