ST. PETERSBURG, Fla., April 23, 2019 /PRNewswire/ -- Stakeholders in commercial and multifamily real estate take note: New federal proposals further clarify how the government wants Opportunity Zones to work, advises Mike Harris, Managing Director of real estate tech and services firm CREModels.

The 169-page document, issued by the Treasury Department and IRS on April 18, is the second installment of proposed regulations aimed at clarifying the rules on Opportunity Zones and funds. Importantly, Harris says, it contains the first written confirmation that the government wants to include businesses that bring in substantial gross revenues from outside of the zones in which they are located.

"It's confirmation that tech startups, manufacturers, office tenants and others are potentially eligible, not just local mom-and-pop stores," Harris said. "This is very good news for the real estate world."

According to the newly proposed Gross Income Rule, Harris continues, businesses can qualify in one of three ways: They can make sure their employees work at least 50 percent of their hours within the Opportunity Zone; ensure that they provide at least 50 percent of their services within the zone; or maintain significant management and operational functions within the Opportunity Zone.

Investors, developers, fund managers and lenders have been scratching their heads about a host of questions related to Opportunity Zones ever since the incentives were introduced as part of the Tax Cuts & Jobs Act of 2017, Harris noted. Details and updates in the new regulatory proposals are a step on the road to final answers, he said. "We are poring over the proposals now and posting summaries and highlights online at our Qualified Opportunity Zones Resource Center," Harris said. "It's free to access and is focused specifically on the commercial and multifamily sectors."

Proposals in the Treasury/IRS document clarify policy points related to wind-down periods, capital recycling, long-vacant property, previously owned assets, triple-net-lease properties, capital-deployment timelines, land-banking, and the eligibility of assets not entirely located within a particular Opportunity Zone, he said. For a high-level description of some of these proposals, read this post at CREModels' Qualified Opportunity Zone Resource Center.

Tax and legal experts are still interpreting the lengthy and complex document, Harris cautioned. "Ambiguities remain, and the 60-day public comment period could lead to further refinements," he said. "Stay tuned."

About CREModels

CREModels provides transactional, managed and enterprise services for commercial and multifamily real estate fund managers, investors and developers. The St. Petersburg, Fla.-based firm's Transactional Services division performs full-service real estate due diligence, lease abstraction, acquisition underwriting and deep-dive reviews of books and records. The Managed Services division handles CAM reconciliation, asset management and portfolio review. The Enterprise Solutions division creates custom technology and big-data integrated solutions. CREModels' flagship software platform, The CRE Suite, serves as the backbone on top of which all services are provided. The CRE Suite optimizes the workflow of acquisitions teams, fund managers and developers from pursuit through acquisition and all the way through disposition. For more information, visit CREModels.com.

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SOURCE CREModels