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What’s in the second tranche of proposed regulations for Opportunity Zone Tax Incentives?

The U.S. Department of the Treasury has issued a second tranche of proposed regulations to implement and clarify the new Opportunity Zone Tax Incentive. A public hearing on the Second Tranche Regulations has been scheduled for July 9, 2019, and a 60-day comment period commenced on May 1, 2019.

The Second Tranche Regulations affect the operations of a Qualified Opportunity Fund (QOF) and the conduct of a trade or business in an Opportunity Zone.

We have listed here the sections that have undergone substantial change. To learn more details, go to

The Second Tranche Regulations:

  • Provide a definition of the "original use" of tangible property, including both real and personal property.

  • Clarify when original use begins on a vacant property

  • Define Substantial Improvement – Unimproved Land concept more closely.

  • Contain a new rule for property that straddles an opportunity zone and a contiguous non-opportunity zone.

  • Contain a set of very helpful rules for how leases of property in an Opportunity Zone can comply with the Opportunity Zone Law.

  • State that a QOZB tenant must be conducting an active trade or business.

  • Address the terms on which a QOZB may acquire qualified opportunity zone business property and conduct its trade or business under a lease instead of an ownership structure.

  • Stipulate Lease Valuation Rules.


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