Why should I be careful with my QOF when investing into nonqualified financial property?
Two reasons. First, compliance testing. You don't have much runway to invest in non-qualified property. Second, the anti-abuse rules - if the government thinks you are trying to game the system, they can use the anti-abuse rules to partially or completely nullify tax benefits. I do not suggest putting non-OZ property and projects into QOFs or QOZBs.
So you don’t incur interest charges or so you don’t get knocked out of the program.
90% of a QOF's assets must be Qualified Opportunity Zone property, of which nonqualified financial property is not. A QOZB can have no more of its assets as nonqualified financial property unless using as reasonable working capital. Failure to meet these investment standards result in monetary penalties.
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