It can't be sold; rather, it must be master leased and subsequently developed. Selling would trip the related party rules, which would invalidate QOZBP status.
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How can a building owned by an LLC qualify as a QOZBP in an OZ?
If a building in an OZ is owned by an LLC, which itself is owned by 5-6 people, can the building be sold to a second, new LLC which is owned by several of the owners of the original LLC, although perhaps in different percentage ownerships, and then substantially improved to qualify as an QOZBP? If not, what is the applicable restriction?
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In determining whether this transaction is viable, you must keep in mind the related party transaction rule of 20% and whether it will be a circular transaction as described in the final regulations.
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