IRS Finalizes OZ Regulations
The much-anticipated finalization of the rules governing Qualified Opportunity Zone investing have received official approval. The consensus is that they provide the necessary clarifications for investors to confidently move forward. The proposed regulations include several general clarifications including: what types of property qualify as Qualified Opportunity Zone Business Property, guidance on the penalty imposed for failure to meet investment standards, and reporting requirements for Qualified Opportunity Funds when an investor divests from the QOF.
Some other important clarifications include:
How large C Corporations can invest in opportunity zones.
Expansion of the working capital safe harbor.
Aggregation of property for the substantial improvement test.
Vacancy period to allow a building to qualify as original use.
70% use test for tangible property.
Location and use of intangible property.
The final regulations are not only detailed but also quite flexible in most respects. The Final Regulations Frequently Asked Questions can be downloaded here.
The entire 544 page document can be downloaded here.
The total number of census tracts certified as Opportunity Zones by the U.S. Treasury.
Potential unrealized capital gains eligible for Qualified Opportunity Fund investment and tax treatment.
Treasury Secretary Steven Mnuchin’s estimate of private capital that will flow into Opportunity Zones.