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Each local governmental entity with taxing authority also offers tax abatement incentives for new and expansion of existing businesses. The individual project's new job creation and value of new real property and equipment are important factors.
Various other programs are used including Tax Increment Financing (TIF) and participation with the state on their infrastructure program.
Tax Abatement
Tax abatement is offered by the local governmental taxing unit on real property and equipment. Real property can qualify for a three year, seven year or ten year abatement on new buildings and improvements or increases in assessed value on remodeled or renovated structures. Land does not qualify. Manufacturing equipment (new to the State of Indiana) qualifies for a deduction from assessed value over a ten year period. Equipment not used in direct production, such as office equipment, does not qualify.
For an example of Tax Abatement Schedules, click here.
Tax Abatement Update: Please note the following tax abatement enhancements now in effect:
Business Real Estate Taxes
Abatement for vacant buildings local governing bodies may now grant a 1 or 2 year tax abatement on a commercial or industrial building if the building has been vacant for at least one year and taxpayer is going to lease and/or occupy the building. The general abatement procedural rules and filing requirements apply. The taxes are abated as follows:
Year 1 - 100% of the assessed value of the building or portion of the building being occupied by the owner or tenant
Year 2 - 50% of the assessed value
Business Personal Property Taxes
Abatement for used equipment - local governing body may now grant tax abatement for property that was previously used in Indiana. The equipment must be acquired in an arm's length transaction with an unaffiliated party.
Tax Incremental Financing
Bonds issued by a local municipality may be used to finance infrastructure improvements and new construction areas needing growth or rehabilitation. The infrastructure pays for itself through increased tax revenues (resulting from the property valuation increases) which are pledged for repayment of the bonds.
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