That would not be a qualified investment. The transaction could be done but it wouldn't be a qualified investment securing any OZ tax benefits.
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What do the new regs say about the related party rules?
What if the QOF investor sell the property to a QOZB and then invest the gain into the related QOF?
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The regulations generally frown on this. The final regulations say that if the seller takes greater than a 20% equity stake in the purchasing entity, the underlying property will be non-qualifying property under the OZ rules. If the seller takes less than a 20% equity stake in the purchasing entity, the seller runs the risk of having his individual investment be a non-qualifying investment. You should proceed with caution here.
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