When you sell a business, the clock starts. An eligible capital gain can be invested into a qualified opportunity zone offering within 180 days. Learn more about the tax advantages in the rewritten opportunity zone program, and Capital Square Opportunity Zone Fund IX, a 320-unit apartment and apartment hotel development in Scott's Addition, Richmond's top rental submarket.
Investors must satisfy a number of requirements, including minimum holding periods, to qualify for opportunity zone tax benefits. Consult your own tax advisor.
The new opportunity zone program, referred to as OZ 2.0, takes effect in January 2027. An eligible capital gain can be invested into a qualified opportunity zone offering within 180 days of being recognized. Under OZ 2.0, an investment comes with the following enhanced tax benefits.*
Federal tax on the capital gain you invest may be deferred for five years from the date of investment. An investment made in early 2027 defers that tax to 2032.
Hold for five years and the deferred gain may qualify for a 10% step up in basis.
Hold the investment for at least 10 years and the appreciation on it may be excluded from federal tax entirely.
* Investors must satisfy a number of requirements, including minimum holding periods, to qualify for opportunity zone tax benefits. Consult your own tax advisor. Deferred tax is not forgiven and becomes due at a later date.
Scott's Addition was designated an opportunity zone when the program began. Capital Square has built there five times since, and Fund IX is the sixth. Allocations are being reserved now and funded from January 4, 2027, which places the investment under the enhanced tax benefits of the new opportunity zone program.
“This is the first time you could sell any asset and have deferral and exclusion, and you don't have to die to get it.”
Answer four questions and we will show you how the timing works for a capital gain.
Gains from many appreciated assets may be eligible, not only real estate.
This fit check is educational and based solely on the answers provided. It is not a determination of eligibility, suitability or accredited status, and it is not tax, legal or investment advice. Opportunity zone treatment depends on individual facts and circumstances. Consult your own tax and legal advisors.
Scott's Addition has been an opportunity zone since the program began, and since 2019 Capital Square has completed five developments here. The submarket now commands the highest rents in Richmond, averaging more than 34% higher per month than downtown.1 Its median household income, education levels and employment rate all now run ahead of the city's.2 As Capital Square's own leadership puts it, the neighborhood is too prosperous to be an opportunity zone any longer. That is what the program was designed to do.
1. Walker & Dunlop, as cited in the CSRA Opportunity Zone Fund IX, LLC Offering Brochure, Capital Square.2. U.S. Census Bureau, American Community Survey, as presented in the CSRA Opportunity Zone Fund IX, LLC Fact Sheet, Capital Square.
Scott's Addition, Richmond, Virginia. Opportunity Zone Fund IX is Capital Square's sixth development in the neighborhood.
Scott's Addition commands the highest rents in the city, averaging more than 34% higher per month than downtown Richmond. Otis, Capital Square's Fund V project directly across the street, is currently achieving among the highest rents per square foot in the market.
Richmond's most popular dining and entertainment neighborhood offers walkable access to breweries, farm-to-table restaurants, grocery stores, museums, parks and The Diamond, home to the city's minor league baseball team.
LEGO is building a $1 billion factory nearby with roughly 1,760 projected jobs, CoStar is constructing a $460 million innovation center expected to add 2,000 jobs, and Meta, Amazon and Capital One have all invested in the region.
Six Capital Square developments in one neighborhood since 2019. Scott's Addition has grown its way out of the measures that made it an opportunity zone in the first place, and no tract designated under the new map will have a record like this behind it.
Capital Square's Scott's Addition development portfolio. Completion dates from the Capital Square Development Track Record, July 2026. Opportunity Zone Fund IX is under development; the estimated completion date is not guaranteed.
| Measure | Scott's Addition | City of Richmond |
|---|---|---|
| Median household income | $63,975 | $59,606 |
| Adults with a bachelor's degree or higher | 69.4% | 44.1% |
| Unemployment rate | 2.5% | 6.2% |
| Population between ages 20 and 34 | 67.1% | 29.8% |
| Median age | 28.3 | 34.5 |
Source: U.S. Census Bureau's American Community Survey, as presented in Capital Square offering materials.
A 2.18-acre site at 1600 Roseneath Road, at the intersection of Roseneath Road and Moore Street, developed into a mixed-use community of 220 traditional apartments and 100 furnished apartment hotel rooms with ground-floor retail.
High-end interiors with market-leading amenities shared by apartment residents and hotel guests.
A rooftop pool and deck, on-site parking at one space per unit, and shared amenity space across both uses.
A prominent corner in a dense, walkable district, with up to 15,000 square feet of ground-floor retail.
1. Distributions and the preferred return are not guaranteed and are subject to available cash flows. The manager reserves the right to adjust the number of Class A investor units issued at its discretion. 2. The description of priority of distribution is a summary and is qualified in its entirety by the full text of the operating agreement. See the fund's private placement memorandum. Given the early development stage of the project, all features, specifications and plans described here, including the manager's intention for the project to have an apartment hotel component, are subject to change.
The sponsor
Capital Square has raised more than $255 million across eight prior opportunity zone funds since 2019, has delivered 1,600 multifamily units across those projects, and has completed five developments in Scott's Addition. Fund IX is the sixth.
Acquisitions, development, construction management and property management are all in house. The development team has completed more than 32 developments and 6,500 units, with nine current projects carrying a total development cost in excess of $670 million.
FTI Consulting, commissioned by Capital Square, has analyzed the economic and fiscal impact of these developments in Richmond, Raleigh and Charleston. “Capital Square is one of the sponsors at the top in terms of sophistication and quality.” — Jimmy Atkinson, founder, OpportunityZones.com
Amid the creation of new housing, not a single resident has been displaced by Capital Square's opportunity zone development work.
Past performance is not a guarantee of future results. Prior fund results are not indicative of the results of this offering. Cash flow, returns and appreciation are not guaranteed.
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We'll discuss the new opportunity zone program's tax benefits, Capital Square's Opportunity Zone Fund IX in Scott's Addition, and answer your questions.
Once an eligible capital gain is recognized, an investor generally has 180 days to invest that gain into a qualified opportunity zone offering in order to defer federal tax on it. The clock typically begins on the date the gain is recognized, though gains reported on a Schedule K-1 from a partnership or S corporation can have later start dates than owners expect. This is one of the first things worth confirming with your certified public accountant.
Only the gain. Opportunity zone deferral applies to the amount of eligible capital gain invested, not to the gross proceeds of the sale.
A reservation sets aside an allocation in the fund and moves paperwork and accreditation verification forward, so nothing is outstanding when funding opens. No capital changes hands during the reservation period and nothing is held in escrow. A reservation is not itself a purchase of securities, and the terms are set out in the offering documents, which should be reviewed with your advisors.
That depends on the exact date your gain was recognized, which is not always the date people expect. Gains reported on a Schedule K-1 from a partnership or S corporation often start the clock considerably later than the underlying transaction. This is worth a short conversation rather than a guess. Contact us and we will walk through your dates with you.
Plan on 10 years. The full opportunity zone benefit requires a minimum 10-year hold, the investment is highly illiquid, transfer is restricted, and withdrawals of capital contributions are prohibited. The fund may not make distributions until a sale or refinancing, if at all.
This is a Rule 506(c) offering, open to accredited investors. The minimum investment is $100,000. Accredited investor: income over $200,000 individually or $300,000 with a spouse in each of the last two years, or net worth over $1 million excluding a primary residence.
Ready to talk through your gain and your timing?