Many communities across the United States are thriving right now. Interest rates have reached recent lows, and this factor is encouraging entrepreneurs, job seekers, and the general public to step outside their comfort zones and make their way to those communities. At the same time, employment and housing opportunities are driving newcomers to those areas in droves. In turn, other businesses are relocating to those areas in an attempt to cash in on the potential profits of the physical and economic influx. It’s an ongoing cycle that benefits the businesses in those communities as well as their residents.
On the Other Side of the Fence
While some communities are flourishing, others are struggling like never before. Businesses are leaving them behind in favour of more populated areas or cheaper property taxes and other economic advantages. They’re taking much-needed jobs, funding, and shopping opportunities along with them. Because of that, residents are also leaving, relocating to the communities that are experiencing unprecedented success. Those who are left behind find themselves with few options and facing significant hardships.
Bringing Balance to the Mix
In light of the growing disproportion, measures have been taken to create a more balanced scenario. Opportunity zones and enterprise zones have been created to encourage growth in areas that are falling behind. People and businesses can invest in qualified opportunity zone funds and other options to help build up those struggling communities. Members of the communities, businesses, and investors can all benefit greatly from these arrangements.
What Are the Differences Between Opportunity and Enterprise Zones?
Opportunity and enterprise zones were developed with similar objectives in mind. Both are designed to bring funding, jobs, improvements, and other essential economic advancements to areas that are experiencing hardships. That being said, certain key differences exist between the two.
Taking a Closer Look at Opportunity Zones
Per the Tax Cut and Jobs Act of 2017, opportunity zones were created as an opportunity for potential investors. In exchange for making long-term investments in areas that need them, investors are granted various tax breaks and other incentives. They can place their capital gains in opportunity zone funds. From there, the funds are invested in opportunity zones. They’re used to make needed improvements and carry out revitalization efforts among other aspects. Investors benefit from potential profits and reduced taxes on capital gains, and the communities and their residents benefit from better housing, more employment opportunities, and better access to essential goods and services to name a few advantages.
Enterprise Zones Explained
Enterprise zones, on the other hand, are geared more toward businesses. They were created to encourage businesses to move to areas that are struggling or open new headquarters in those communities. At the very least, they’re meant to encourage businesses to remain in communities that are experiencing hardships rather than relocating to more opportune locales. In exchange for moving to or staying in downtrodden areas, those businesses are given special exemptions, tax incentives, and other benefits. They may also receive benefits for hiring additional employees and other efforts that benefit the surrounding community.
In a Nutshell
Many communities in America are struggling right now. Their hardships are leading residents and businesses to explore opportunities that may be available elsewhere. This causes those communities to plummet even further. Enterprise and opportunity zones were developed to help stop the downward spiral while benefiting everyone involved.
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