Known zones for de-risking OZ investments
Not all Opportunity Zones carry the same level of risk — or opportunity.
In this short video, Capital Square’s founder and co-CEO Louis Rogers and EVP, co-head of development, Natalie Mason, discuss why established OZ 1.0 tracts with proven growth, infrastructure and demand can help de-risk investments while positioning clients to maximize capital gains exclusion benefits in 2026.
Approximate transcript:
Natalie: Louis, there’s a lot of excitement around the permanent opportunity zone bill, and new census tracts will be designated. There’s going to be a lot of opportunity going forward, but 2026 is still a great year to be actively investing in opportunity zones. We’re fortunate that we have a really great open offering for what will be our fifth development in the Scott’s Addition neighborhood of Richmond, Virginia, a thriving census tract. Why is 2026 still a great time to invest?
Louis: It’s the best time to invest, because if you have capital gains, you only have 180 days to invest. So, if you have capital gains this year, you need to invest within 180 days. The best part is you can invest in a known zone. That almost rhymes. A known zone. Why is Scott’s Addition a known zone?
Natalie: We’ve had income levels rising. We’ve had a lot of development. For the census tracts that have had the benefit of the last 10 years of growth, you can walk around any opportunity zone designated area today and know if it’s been successful. You can walk around and see if investment has gone into that census tract. So, if you invest this year into OZs, you’re investing into a known zone. It helps de-risk the real estate.
Louis: You know what you’re going to get. The OZ 2.0 zones are likely to be poorer and more rural, and so it’ll be difficult to find the level of both economic activity to satisfy the goal, the purpose of the statute, and also to make a profit.
Natalie: And it’ll take time, right? If you think about how long does it take me even to bring a potential development to your door?
Louis: It could be years.
Natalie: Right, it at least takes months to vet new development opportunities, and so we, as the development community, won’t know the new census tracts until later in 2026. It will take time for the industry to lock up great opportunities and get offering materials out there for new designations. It will take time for those opportunities to reach the investor, so 2026 still represents a more immediate-term investment horizon of opportunity zone developments that are more likely to be “shovel ready” or be ready to go.
Louis: And high-net-worth investors have capital gains all the time, so invest in a 1.0 this year, and then, next year, invest in a 2.0.
Natalie: Make it part of a multi-year strategy.
Louis: Absolutely. Where else can you defer and exclude capital gains from the sale of any asset – any asset: stocks, bonds, crypto, whatever that is.
Natalie: Is there any other program out there that provides complete tax forgiveness on appreciation?
Louis: Death. Not something you really want to plan for.
Natalie: Yes, you don’t want to make that part of your investment strategy.
Louis: No, 1031 for real estate is deferral. It’s not exclusion, so you have to continue to exchange every time you sell. There’s really nothing else like it in the entire Internal Revenue Code. In the history of the Internal Revenue Code, there’s never been anything like it. It’s absolutely amazing.
In conclusion:
Ready to discuss why “known zones” may offer a more compelling path forward in today’s environment. Let’s connect.
Additional resources:
- OZs are a core advisor tax strategy (video)
- A window of opportunity: Qualified opportunity zone funds in 2026 (article)
- OZs: Changing the world of tax-advantaged investing (video)
- OZs: One of the most effective economic development tools in history (video)
- Debunking opportunity zone myths (video)
Disclosure: Securities offered through WealthForge Securities, LLC, Member FINRA/SIPC. Capital Square and WealthForge Securities, LLC are separate entities. There are material risks associated with investing in DST properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short-term leases associated with multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, returns and appreciation are not guaranteed. IRC Section 1031 is a complex tax concept; consult your legal or tax professional regarding the specifics of your particular situation. This is not a solicitation or an offer to see any securities. Please read the Private Placement Memorandum (PPM) in its entirety, paying careful attention to the risk section prior to investing. Private placements are speculative and illiquid. Diversification does not guarantee profits or protect against losses.
