Yes, there are rules surrounding what you are using the money for.
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How can I create my own QOF? Does it need to carry a minimum investment to be qualified?
Do I need to establish what exactly I will use the fund’s money for or can that be determined later?
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There is no minimum investment, but you do need to establish in your organizing documents what kind of business(es) the QOF will undertake.
Yes, anyone can create their own QOF but it has to be a corporation or partnership entity. It can't be a single-member LLC. You also would want a QOZB to be established typically under the QOF (also a corp or partnership) so that you can take advantage of cash under the working capital exception whereby a written plan for cash deployment is created. What the cash is used for would need to be decided in the current year due to year-end reporting and detailed disclosure. Treasury does not want to give deferral to taxpayers that sit on cash in their fund without putting it to use in an intended manner.
To create a QOF, simply consult a knowledgeable lawyer and accountant. There is no minimum investment. Do not attempt to do this yourself without professional assistance.
That question would come with a very long answer to describe all the details. But to make a long story short, yes you can. No there is not a minimum. However, compliance and consulting will be costly as this is highly technical. If you not prepared to pay at least $20,000 in annual fees for attorneys and CPAs, it's not worth the consideration and you would be better off to invest in an open fund established by someone else. That is, if you want to be in an OZ Fund at all.
It is fairly simple. Determine if your property is in a zone. If it is new build, it will qualify as first use; if not, it has to be substantially improved with 30 months of purchase. Put the property into an entity (corporation, llc or lp) and elect for that entity to be treated as a qualified opportunity fund by filing form 8996 with the IRS. Determine how you are going to raise capital for the project. Thus, you do need a plan. You cannot just land bank. Only investors who invest capital gains will qualify for the tax benefits. Structure the fund and conduct the offering of the fund to raise the capital. No minimum amount required.
You can determine later, subject to a working capital test that kicks in after 6 months.
You can create your own fund and auto certify using form 8996. Be wary of SEC investment rules. There is no minimum investment required and the organization documents must state that the purpose of the same is to invest in opportunity zone property. No details as to which property is required.
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