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How does the second set of proposed regulations define original use when it comes to OZ property?

How can I make sure to meet the original use test?


Answers
  • Neil Faden
    August 11, 2019

    If the project has not yet been placed in service, then the use can be original use. The new regulations also clarify that if a project has been vacant for five years, there can be original use.

  • Paul Wassgren
    August 08, 2019

    Although this is a more complex area, the Treasury Department has focused on depreciation. The owner, who first begins to take depreciation on the property, can generally claim original use.

  • Maria De Los Angeles Rivera
    August 08, 2019

    In general, for purchased property original use will be when the property is first placed in service for depreciation purposes in a zone. Special rules for property that has being vacant for at least five years and for leased property. Also, special rule for real property that is substantially improved within 30 months.

  • Blake Christian
    August 08, 2019

    There are many intricacies, but in general the QOF or QOZB will be treated as the original user of the following property acquired after 2017 in a taxable purchase: new asset which has ever been used by another taxpayer; used assets which had not previously been used in an OZ; new or used leased assets (from a lessee perspective); used buildings that the taxpayer invests additional improvements equal to the original cost basis of their purchase within 30 months; used personal property that is improved by the new owner by doubling each asset’s basis within 30 months of purchase (this will be a hard test to meet); unimproved land.

  • John Wegmann
    August 09, 2019

    The second set of proposed regulations provides that the "original use" of tangible property acquired by purchase by any person commences on the date when that person or a prior person first places the property in service in the QOZ for purposes of depreciation or amortization (or first uses the property in the QOZ in a manner that would allow depreciation or amortization if that person were the property's owner). Thus, tangible property located in the QOZ that is depreciated or amortized by a taxpayer other than the QOF or QOZB would not satisfy the original use requirement of Sec. 1400Z-2(d)(2)(D)(i)(II) under the second set of proposed regulations. Conversely, tangible property (other than land) located in a QOZ that has not yet been depreciated or amortized by a taxpayer other than the QOF or QOZB would indeed satisfy the original use requirement under Sec. 1400Z-2(d)(2)(D)(i)(II). However, the proposed regulations do clarify that used tangible property will