You could lease your property to a qualified Opportunity Zone business but you wouldn't derive any of the tax benefits of an investment in an Opportunity Zone.
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If my primary residence is located in an Opportunity Zone, is there any way that I can take advantage of the OZ program?
Could I lease out my property?
Answers
There must be an investment of some kind. You would need to lease out your property to a Qualified Opportunity Zone business.
Not really. It has to be acquired by a Qualified Opportunity Fund by purchase from an unrelated party after Dec. 31, 2017.
The benefits of the program from a federal tax perspective is for those taxpayers who defer capital gains and invest in a fund. You could be a trade or business in the zone that gets investment from a fund. There are a great deal of requirements for rental activities. You should also check any benefits granted locally by the states.
Yes. But there are rules for leasing, fair market and more. That gets you income but no tax savings.
There is no real practical way to take advantage of the program. It strikes me as trying to jam a square peg in a round hole. The closest you could get is moving out of your home and gut renovating it, which would be rather silly, I think.
Yes, you may lease the property to a QOF or a QOZB even if related. There are further limitations, however, if the lessee is to a related.
You would have had to have purchased the property post-2017 and rolled a capital gain into it to qualify. As a result the property will not meet the Qualified Opportunity Zone property classification and the property will not be eligible for the step-ups and exemption. Leasing the property does not change your result. If properly zoned and you started a new business on the property by rolling a qualified capital gain, the value of the business (but not the property) might qualify.
Sure, if you make an investment of other OZ property. Your home will not qualify you for OZ benefits.
Complicated question. Doable, but probably too complex unless the residence/rental is valuable/large.
Yes.
Just by owning a residence inside an Opportunity Zone gives you no tax advantage. You may get an economic advantage by doing all the work to get your property legally entitled to be improved or expanded. There is a demand to find assets that are pre-entitled for improvements to put inside an OZ fund. The increase in value for pre-entitled properties had been reported as about 20%. No guarantees you will get this improvement. You could also sell your property to an Qualified Opportunity Fund. If you invest the taxable gain into the fund that investment will only get tax benefit if your interest in the fund is less than 20%. To give you better advice, more detail about personal circumstances would need to be known.
I don't see how this would benefit you with your primary residence. If you leased out your property, it would have to be to a qualified Opportunity Zone business. And even if that qualified, it would give you no tax benefits as the owner, the benefits would belong to the lessee.
There is no direct benefit to current property owners. Benefits accrue to investors who liquidate assets and invest the capital gains in Opportunity Funds, which in turn invest in zones.
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