The Opportunity Zone tax benefits are not available to transactions involving related party sales. But the related-party test is based on 50% not 70%. The 70% rule is the required QOZBP of the total assets in a QOZB.
Ask A Question
Why do I need to provide an organizational chart of the seller of the property, which includes all direct and indirect owners, when reviewing the 70% requirement?
What happens if an indirect owner is my relative?
Answers
If property is purchased from a related person - 20% common ownership with attribution rules - the property is not qualified Opportunity Zone business property. So if you or your relative owns interests in both the buyer and the seller, directly and indirectly, the property may not be qualified Opportunity Zone business property, if the overlapping ownership (including attribution) is more than 20%. The QOZ rules and the attribution rules for determining if a buyer and seller are related are very intricate and complicated. You should consult with your tax advisors.
For property to be qualified Opportunity Zone business property, it must be tangible property that is acquired after Dec. 31, 2017, by purchase from an unrelated party along with other requirements. The related party rules will be triggered with more than 20% common ownership. You should have a professional help you understand he percentages and relationships as it relates to your fund and purchase.
I am not sure. Likely because for property acquired by a QOZB, it cannot be acquired from a related person (broadly defined), either contributed or purchased.
Qualified Opportunity Zone property has to be purchased from an unrelated party. Family members can be deemed related for purposes of this determination.
It's OK, so long as you haven’t violated the related party rules.
The property must be acquired from unrelated parties. The attribution rules that apply will determine direct, indirect and constructive ownership. That is why an organizational chart is needed. There are also rules for relatives' attributions if ownership.
DISCLAIMER:the information found on this website is intended to be general information; it is not legal or financial advice. Specific legal or financial advice can only be given by a licensed professional with full knowledge of all the facts and circumstances of your particular situation. You should seek consultation with legal and financial experts prior to participating in any aspect relating to Opportunity Zones. Posting a question on this website does not create an attorney-client relationship. All questions you post will be available to the public; do not include confidential information in your question.