Should I buy the property in my own name if I’m going to convey it to my QOZB later on? | OZPros

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Should I buy the property in my own name if I’m going to convey it to my QOZB later on?

The number one thing not to do with your Qualified Opportunity Zone (QOZB) transaction is: do not under any circumstances buy the property in your own name with the plan to convey it to your QOZB later on. Referencing our handy dandy Opportunity Zone Cheat Sheet, you have to start with a capital gain that goes into a Qualified Opportunity Fund within 180 days.

Next you need to drop that cash down into a QOZB, that hits your 90% test. The QOZB has to have 70% of its tangible property as a Qualified Opportunity Zone business property. The test is that it’s acquired after December 31st, 2017 by purchase from an unrelated seller. So if you convey property and take title to the property yourself, you’ve got your deed in your hand or in your individual name with the plan that you’re just going to convey it to your QOZB later.

And we have heard a gazillion reasons as to why this has happened, because it was easier to do. It was easier to get financing. Whatever the reason is, don’t do it! The reason for this is because it makes it a related party transaction which is extremely difficult to cure, especially if it’s got a building on it. Now, we’ve been able to solve this in a number of ways, especially if somebody bought it in an LLC that we can turn into a QOZB later on, so we can walk through exactly what to do with that on a strategy call.

Now, one of the other ways that we’ve been able to cure this is by using a ground lease. And whether that’s a ground lease from yourself to the QOZB or whether that’s a ground lease to a third party ground lease company, we’ve successfully been able to utilize that in order to cure these party related issues. But once again, it’s always easier and better if you do this on the front end correctly. That’s what we specialize in at OZPros. We want to educate you about how to do it correctly and we want to actually help you do it correctly. That’s the reason why we’ve got the Opportunity Zone Cheat Sheet (download here), we’ve got Strategy Calls (click to learn more), we got the OZPros Compliance Bootcamp. Download your cheat sheet today, sign up for a strategy call, or join us every Tuesday from 10 to 11:30 at the OZPros Compliance Bootcamp. We’ll make sure you learn how to do your Opportunity Zone deal correctly from the start.

Mission Critical # 2