Opportunity Zones Q&A: How Much of an OZ Fund Can One Investor Own?

During our Q3 and Q4 Opportunity Zones webinars last year, we received many great questions covering a wide range of important topics. To help further your understanding of this exciting new program, our Client Services team, which has decades of 1031 exchange experience, partnered with our co-presenter, Novogradac & Company, to provide responses.

This is the third installment of our Opportunity Zones Q&A blog series.

Q: Is there a maximum ownership percentage (e.g., 10% or 20%) which a single investor can have in an QOZ Fund?

A: There are no limitations on the percentage of ownership that an investor can own in a Qualified Opportunity Fund, with perhaps one exception.

There is a requirement that Qualified Opportunity Zone Business Property must be acquired by the Qualified Opportunity Fund from an unrelated party, which status is determined by using a 20% common ownership test for relatedness. To the extent that the seller of an asset to a Qualified Opportunity Fund also wants to own an interest in the Qualified Opportunity Fund, their ownership in the Qualified Opportunity Fund would be limited to 20% or less.

However, for investors that have no relationship to the sellers of the property, there is no limitation on the percentage of their ownership in the Qualified Opportunity Fund.

Read More of installments of our Opportunity Zones Q and A below:

• Can an LLC Qualify as an Opportunity Fund?
• Are Distributions from an OZ Fund Taxable as Ordinary Income?
• Previously Held Property