The leased property must be valued. Then it can be counted a qualifying tangible property. Use an MAI to be safe.
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How can operating businesses that lease property qualify as QOZBs?
I heard the new regs allowed for this if certain conditions are met. Is that true? What are the conditions?
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True. Lease has several requirements. It's easy to comply.
Leasing property should be OK as long as the taxpayer meets original use/substantial improvement and the lease is at FMV.
The regulations state that the lease of property will constitute an active trade or business unless it is a triple-net type of lease. The property needs to comply with the same rules to be QOZBP: property purchased from an unrelated person after Dec. 31, 2017; property leased from an unrelated person after Dec. 31 2017, or from a related person at arm’s length market rates; original use of the property commences with the QOF or when the QOF substantially improves the property; and during substantially all (90%) of the QOF’s holding period of the tangible property, substantially all (70%) of the use of the tangible property was in a QOZ
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