Qualified Opportunity Zone Business Property (“QOZBP”) is substantially improved for this purpose if during any 30-month period following acquisition of such property there are additions to basis that equal the adjusted basis as of the beginning of such 30-month period.
For example, let’s say a QOF acquired a vacant hotel for $10 million on June 30, 2018, with the intent of turning it into workforce housing. The property’s basis is $10 million – what the fund paid for it. During its first year of ownership, the fund invests an additional $10 million into property upgrades pushing the basis to $20 million. The fund’s formerly empty hotel is “substantially improved”, based on the QOZBP definition.