How Ontario’s Opportunity Zone Helps The Community Thrive
Opportunity Zones were added to the tax code in December 2017 and now exist in all 50 states. These zones are made up of census tracts (or areas) that are eligible for preferential tax treatment. Opportunity zones spur economic development by encouraging investors to invest capital in businesses operating within each zone. Ontario’s Opportunity Zone is made up of four census tracts that are grouped into three distinct areas based on the type of available opportunities.
Benefits Of Investing In An Opportunity Zone
To encourage investments in businesses within Ontario’s Opportunity Zone, investors experience several tax incentives, including:
Deferral Of Capital Gains Taxes
Investors can place existing assets with accumulated capital gains into Opportunity funds, and those capital gains won’t be taxed until December 31, 2026, or when the asset is disposed of.
Capital Gains Tax Reduction
If capital gains are placed in an Opportunity Fund for at least five years, the investors’ basis on the original investment increases by 10%. It increases by 15% after 7 years of holding the investment.
Elimination Of Taxes On Future Gains
If investors hold the asset for at least 10 years, they won’t pay taxes on any capital gains produced through their investment.
Community Benefits of Opportunity Zones
Opportunity Zones encourage economic development by enticing investors to invest in the community. Funds can finance a number of projects to improve the community, such as creating multi-family housing, rehabilitating historic buildings, and supporting industrial, retail, and restaurant businesses. To accomplish these goals, the City of Ontario divides its Opportunity Zones into three distinct groups:
Historic Euclid Avenue District
Located in the civic heart of downtown, the Historic Euclid Avenue district includes City Hall, City Library, Ontario Town Center, and other notable historic buildings. In the past 10 years, this district has benefited from $200+ million in public investments to fund new parks, amenities, facilities, multi-family housing, retail, restaurants, and the rehabilitation of historic commercial buildings to house new businesses.
Holt Boulevard Corridor
This central location is close to transportation options, the Ontario Convention Center, and other visitor and tourism businesses. Over the years, there’s been multiple investments to create mixed-use commercial buildings and multi-family housing, as well as restaurant, retail, and visitor-related projects. Future funding will be put towards revitalizing the historic boulevard’s many vacant land parcels and structures.
Ontario Airport/Industrial Core
This district is home to the Ontario International Airport, UPS, FedEx, and the Ontario Convention Center. The majority of this space is zoned for industrial use, and many investments have been made to develop older industrial assets and improve and expand the airport’s facilities and capabilities.
Opportunity Zones are just one of the many ways the City of Ontario is helping spur business development and economic growth. If you’re interested in making an investment or want more information about starting a business within the Opportunity Zone, contact us today.