There might be a way to structure around this scenario. There are many facets to each of these questions.
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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
Yes, it is possible, but it requires careful structure. Probably a lease to a new OPZQBIZ.
The existing LLC would need to file Form 8996 to elect status as a QOF, and all compliance requirements would apply.
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.
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.
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