Tangible property meets the Opportunity Zone original use test when no one has placed it in service in that zone before the fund or its business does; the regulations date original use from the day any person first places the property in service in the zone for depreciation or amortization (26 CFR 1.1400Z2(d)-2(b)(3)(i)(A)). Real property that has sat vacant for a qualifying period can also count as original use, and as of October 2026 how those vacancy periods apply to zones designated in 2027 has not been addressed by the IRS.
Original use matters because it is the alternative to substantial improvement. Under 26 U.S.C. 1400Z-2(d)(2)(D)(i), tangible property qualifies only if its original use in the zone begins with the fund or business, or the fund or business substantially improves it. Property that meets original use avoids the 30-month spending test on the substantial improvement page.
Key points
- Original use starts when anyone first places the property in service in the zone. New construction not yet placed in service qualifies.
- Used property counts as original use if it was never before used or placed in service in that zone.
- Vacant real property qualifies after 1 uninterrupted calendar year (begun before the zone was listed) or 3 uninterrupted calendar years (begun after the listing notice), if still vacant at purchase.
- Brownfields and property bought from a local government after an involuntary transfer have their own routes.
- For 2027 zones, the designation notice the vacancy rule depends on has not been published.
A decision path
- Was it bought from an unrelated party after the applicable date? If not, original use does not help; the property fails the purchase requirement. Property the business builds itself has its own start-of-construction rule (26 CFR 1.1400Z2(d)-2(b)(1)(iii)). For property acquired after December 31, 2026, the applicable date is the zone's applicable start date, January 1, 2027 for the first new round.
- Has anyone placed it in service in this zone? If no, original use begins with the buyer. This covers new construction and equipment never used in the zone.
- If yes, is it real property that has been vacant long enough? If it meets a vacancy period and was still vacant at purchase, original use begins with the next person to use it.
- Is it a brownfield site, or bought from a local government that took it involuntarily? Either route can treat the whole property as original use.
- Otherwise, substantially improve it. Add more than its adjusted basis within 30 months, or more than 50 percent in a zone made up entirely of rural area.
The placed-in-service rule
Original use in a zone begins "on the date any person first places the property in service in the qualified opportunity zone for purposes of depreciation or amortization, or first uses it in a manner that would allow depreciation or amortization if that person were the property's owner." The test looks at any person, not only the seller.
The regulation's example: on January 1, 2019, a fund buys a newly built hotel in a zone for $10,000,000 from a developer who built it to sell and never placed it in service. Original use had not begun, so it begins with the fund, and the hotel meets the test.
Used property. Used tangible property meets the test if it has not previously been used or placed in service in that zone (paragraph (b)(3)(i)(C)). If it has, it must be substantially improved. Equipment moved into a zone where it was never used before is one example.
Lessee improvements and inventory. Improvements a tenant makes to leased property meet the original use requirement as purchased property for their cost basis (paragraph (b)(3)(ii)). Inventory, including raw materials, produced after December 31, 2017 is treated as meeting the purchase and original use requirements (paragraph (b)(2)(ii)).
The vacancy rules
Under paragraph (b)(3)(i)(B), real property, including land and buildings, can begin a new original use if it was vacant for either:
- an uninterrupted period of at least one calendar year beginning before the date the zone was listed as designated in a QOZ designation notice, and remained vacant through the purchase; or
- an uninterrupted three-calendar-year period beginning after the date the designation notice listing the zone was published, and remained vacant through the purchase.
Original use then begins when any person next uses or places the property in service in the zone. "Vacant" has a defined meaning: real property is in a state of vacancy if it is significantly unused, meaning more than 80 percent of the building or land, measured by the square footage of usable space, is not currently being used (paragraph (b)(3)(iii)).
Hypothetical example
Suppose a 40,000-square-foot warehouse in a 2018 zone has had 34,000 square feet unused (85 percent) since before the zone was listed, and that remains true when a QOZB buys it. Because more than 80 percent is unused, it is vacant under the definition. If the uninterrupted vacancy covers at least one calendar year that began before the listing, and it stays vacant through the purchase, original use begins with the buyer.
If only 30,000 square feet (75 percent) were unused, the building would not be vacant under the 80 percent test, and the buyer would need to substantially improve it. Figures are illustrative only.
Brownfields and local government property
Brownfield sites. A fund or business that buys a brownfield site, as defined in section 101 of CERCLA (42 U.S.C. 9601), may treat all property on the site, including land and structures, as original use if within a reasonable period it invests so that the property meets basic safety standards for human health and the environment (paragraph (b)(3)(iv)).
Involuntary transfers to local government. Real property bought from a local government that holds it because of an involuntary transfer, including abandonment, bankruptcy, foreclosure or receivership, may be treated as original use in full (paragraph (b)(3)(v)).
Leased property from a related lessor. Leased personal property from a related lessor whose original use does not begin with the lessee needs an offsetting purchase of qualifying property of at least equal value within the testing period, and the lessee may not prepay more than 12 months of rent (26 CFR 1.1400Z2(d)-2(c)(3)). See qualified opportunity zone business for the full leased-property rules.
What is unsettled for 2027 zones
The original use and vacancy rules were written for the 2018 map and have not been amended for the 2025 law as of October 29, 2026. Several questions are open for zones designated effective January 1, 2027:
- Which designation notice. Both vacancy periods are measured from listing in, or publication of, a "QOZ designation notice." The 2018 zones were listed in Notice 2018-48 and Notice 2019-42. As of October 30, 2026, no national list of 2027 zones had been published; Treasury and the IRS expect to publish one before January 1, 2027. Until then, there is no notice date to measure from for a new zone.
- Use that predates the designation. The text asks whether any person has placed the property in service in the zone, and does not carve out use from before the tract was designated. The IRS has not said how that reads for buildings already standing in tracts that join the map in 2027. Treat this as a question for a tax adviser.
- Purchase dates. For new zones, property must be purchased after the applicable start date, January 1, 2027 for the first new round (Notice 2026-40, sec. 5.01(1)). A purchase before that date does not qualify for that zone, even if the building is new.
- Comments requested. Notice 2026-55 asks for comments on all aspects of the amended statute, including which regulations should be retained or modified. Comments are due November 23, 2026.
New-zone boundaries use 2020 census tracts, which stay fixed through 2036. Check a site with the Opportunity Zone lookup and follow the certification status on 2027 designations.
This page explains how the rules read. It is not tax or legal advice; vacancy history, placed-in-service dates and the land and building allocation should be documented and reviewed with a tax adviser.
Common questions
What does original use mean for Opportunity Zone property?
Original use in a zone begins on the date any person first places the property in service in that zone for depreciation or amortization, or first uses it in a way that would allow depreciation if that person owned it. Property qualifies if its original use in the zone begins with the fund or its business; otherwise it must be substantially improved.
Can a vacant building qualify as original use?
Yes, if it meets one of two vacancy periods and stays vacant through the purchase: at least one uninterrupted calendar year that began before the zone was listed in a designation notice, or three uninterrupted calendar years beginning after that notice was published. Vacant means more than 80 percent of the usable square footage is not being used.
Does new construction meet the original use test?
Generally yes. A building that no one has yet placed in service in the zone has not begun its original use there. The regulations give the example of a fund buying a newly built hotel from a developer who never placed it in service; original use begins with the fund.
Do brownfield sites qualify for Opportunity Zones?
A fund or business that buys a brownfield site may treat all of the property on it, including land and structures, as original use if within a reasonable period it makes investments so that the property meets basic safety standards for human health and the environment.
How do the vacancy rules apply to zones designated in 2027?
The regulations tie both vacancy periods to the QOZ designation notice that lists the zone. As of October 30, 2026, Treasury had not published the national list of 2027 zones, and the IRS has not said how the vacancy periods apply to the new map.