Commercial Property Rehabilitation Tax Credits
Posted on Wed, Oct 12, 2011 @ 09:33 AM
Is your property eligible for tax incentives if you raised the roof?
In many cases...they are! If you've ever considered making improvements to your commercial property, you're probably aware that most of the renovation, restoration, or reconstruction costs will be tax deductible to some extent, which can save you some money come tax day.
But did you also know that, depending upon the type of rehabilitation you are planning, you may be able to save a great deal more than expected by taking advantage of a rehabilitation tax credit?
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For Instance, here is just a small sample of the programs available.
STATE INCENTIVES:
Michigan
OPRA– Obsolete Property Rehabilitation Act
The state of Michigan has a program that provides a tax incentive to encourage the redevelopment of obsolete buildings. It is designed to assist in the redevelopment of older buildings in which a facility is contaminated, blighted or functionally obsolete. The goal is to rehabilitate older buildings into vibrant commercial properties. The tax incentives essentially freeze the local property taxes for up to 12 years, exempting from local property tax all real property improvements. See an example of a roof lifting project that received a 12 year tax break in Michigan.
Ohio
Department of Development
Property investment incentives are available for commercial and industrial projects involving remodeling or new construction.
CITY INCENTIVES:
City of Philadelphia, PA
Real Estate Tax Abatement
The City of Philadelphia offers a 10-year abatement of real estate taxes on qualifying rehabilitation or construction to encourage urban development and improvements to certain deteriorated industrial and commercial properties.
City of New York, NY
ICAP - Industrial And Commercial Abatement Program
To be eligible for benefits for commercial renovation, applicant must expand, modernize, or improve an existing structure anywhere in the city.
City of Lynchburg, VA
Real Estate Tax Relief Program
Commercial and industrial buildings must be improved so as to increase their assessed value by at least 60%, but without increasing their square footage by more than 15% (Raising a roof does not increase square footage). Additional Incentives offered by the State of Virginia include tax credits for real property improvement, state income tax relief, investment tax credits and job grants. There are also incentives offered if a building is located within an Enterprise Zone.
City of Hartford, CT
(proposed program)
For businesses, the program would offer a seven-year deferral of tax increases associated with improvements to commercial buildings as long as the improvements completed increase the assessed value of the property by a minimum of 25 percent. Businesses that increase the value of their properties by 50 percent or more could be eligible for a 10-year tax deferral under the proposal.
COUNTY INCENTIVES:
Cobb County, GA
Commercial & Industrial Property Rehabilitation Incentive Program
The purpose of this Program is to encourage owners of older commercial and industrial property (twenty years or more in age) in select areas and sites around the County to revitalize those properties. The objective of revitalizing these areas is to contribute to economic growth by creating jobs and improving the county’s tax base.
FEDERAL INCENTIVES:
IRS
The credits do not apply to new construction or additions, but do encompass renovations, restoration and reconstruction. The percentage of rehabilitation costs eligible for the tax credit range from 10 percent to 20 percent, depending on the building's age and status. For example, there exists a Non-historic rehabilitation credit of 20 percent for buildings at least 40 years old, and a 15 percent credit for buildings at least 30 years old.
We encourage you to check with your local tax expert to see if you may qualify for one or more of the many tax credits for rehabilitation projects. To see if your state has a similar program, you can also speak with your local Economic Development Corporation, or visit the official Web site of the state where you will be making the renovations.
