What is the definition of “original use” for both real and tangible property?
Tangible property is original use on the date first placed in service in the Qualified Opportunity Zone for purposes of depreciation or amortization. Used tangible property satisfies the original use requirement if the property has not been previously placed in service in the Qualified Opportunity Zone.
Original use for real estate depends on whether the property is improved or unimproved. Unimproved real estate and abandoned/vacant property which has been vacant for five or more years will be treated as original use by a new owner. Improved real estate will require improvements within a 30-month period that equals the tax basis in the tax basis of the and improvements. Original use of purchased personal property requires the OZ fund or OZ business to be the first user in an OZ census tract (i.e. not eligible for depreciation by another person). Lessees of leased property are treated as original users regardless of whether the property is new or used.
It is tied to whether the fund is the first person to use the property in an Opportunity Zone in a manner that would allow the property to be depreciated.
If the building was vacant for 5 years. Otherwise, into the substantial improvement rules.
There is no definition of original use. However, we do have definitions of converting from original use: if the tangible real or personal property is improved by $1 more than cost; vacant property that is converted to a productive use.
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