There is no limitation based on the type (other than so-called sin businesses). It mainly just needs to be big enough.
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What types of real estate renovation projects qualify for the OZ program?
I understand that not all real estate renovation projects are qualified as OZ business projects. What are some criteria? For example, would my church’ expansion project qualify?
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There is a shortlist of sin businesses that don’t qualify. Churches are good. Liquor stores, massage parlors, suntan shops or golf courses do not. You can search for sin businesses and the list will come up.
Broadly, you must either develop from the ground up or renovate a building. When you change an existing structure through rehab or renovation, this is measured through "substantial improvement," which means you must add to a structure's tax basis at least as much as the structure's initial basis over a 30-month period. For most projects, granular analysis by accountants and/or attorneys usually determines whether the substantial improvement requirement has been met.
It would have to be a renovation of property acquired after Dec. 31, 2017. Improvements must be to tangible property. Improvements must also be to assets in a for-profit entity or an unrelated business entity of a nonprofit that is subject to unrelated business income tax. There are a lot of complexities, I would consult with a nonprofit expert that also has an expertise in opportunity zone law.
There must be an active trade or business use. A nonprofit use would not qualify unless the nonprofit plans to operate a business and report unrelated business taxable income. Renovation projects with an active trade or business component generally require a doubling of the real property basis excluding the value of the land.
The key requirement for the property is to be used in an active trade or business for profit, among others. Therefore, a church’s expansion project will not qualify if the church is a nonprofit organization.
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