Tax abatement is a reduction of taxes or an exemption from taxes granted by a local government on a piece of property for a specified length of time.
Those who own property in Economic Revitalization Areas (ERAs) are eligible for tax abatements. To qualify, owners must make improvements to their property or purchase and put into use new manufacturing equipment. Those who lease facilities can benefit from tax abatement on real property as well if the property owner applies for tax abatement and all other requirements are met. Also, tenants can benefit from abatements on manufacturing equipment and/or research and development equipment. For the purposes of tax abatement qualification, a certified appraiser can determine the value of an improved property or equipment.
Because of tax abatement, property taxes can’t be lower than the prior year’s taxes. The phase-in period is determined by the local government. New manufacturing equipment can have abatement terms for a period of one to a maximum of 10 years. New real estate investment options can also have abatement terms from one to a maximum of 10 years.
Tax abatement can apply to buildings, defined as any new structure, addition, or other improvement that increases the property’s assessed value. Tax abatement can also apply to any new or used equipment that is involved in the production, fabrication, manufacture, assembly, or finishing of other tangible personal property, including equipment used to dispose of solid waste or hazardous waste for conversion into energy or other useful products. Used equipment is eligible for abatement unless it has been previously taxed.
