Previous owned property is subject to the substantial improvement and 20% ownership tests, unless either it is leased to the fund or was vacant for a sufficient time before contributing it to the fund.
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What requirements must qualified opportunity zone property fulfill?
What if I purchased the property in 2017 but didn’t start using it for my business until 2018?
Answers
First, you need a capital gain event, then invest proceeds equal to gain into a QOF, which is a separate legal entity that must have 90% of its assets as qualified OZ business property. The QOF should include an equity interest in a qualified Opportunity Zone business, which must meet many other tests including gross income tests, non-financial property tests, intangible asset tests, etc.
Property purchased prior to 2018 is not “good” tangible property, so you need to structure around this. While this can be done in different ways, one consideration is a ground lease structure to a new Qualified Opportunity Zone Business.
Property purchased in 2017 generally does not fulfill the criteria for QOZBP. The statute holds the property must have been purchased by the QOF or QOZB from an unrelated party after December of 2017.
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