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What counts as a substantial completion when it comes to improvements to an existing property?
What if I want to build additional units for my apartment complex in Los Angeles?
Answers
Building additional units in the same structure should count. There are some questions as to whether building an adjacent structure should count. In my comment letter to the IRS, I asked them to clarify substantial improvement so investors could have more certainty about whether certain projects would qualify.
The OZF or the QOZB must, within 30 months, make capital improvements to the property doubling its initial tax basis, excluding the value of the land and furniture fixtures and equipment.
The substantial renovation of existing property must be completed within 30 months after acquisition for it to meet the original use test. The additional units may qualify as long as all the tests for QOZB and QOZBP are met.
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