An economic development tool designed to encourage new capital investment. It allows a company to phase-in its property tax bill over a period of time. The period of time is defined by the local community and may be for up to 10 years. In the first year, the tax deduction is 100% and declines by specific percentages every year thereafter. This incentive can be used for new investments in new and/or existing facilities called “Real Property Tax Abatement”, and equipment called “Personal Property Tax Abatement”.
Tax abatement is dealt with on a case-by-case basis and is administered pursuant to Indiana Code 6-1.1-12. 1-1 et seq.
Because tax abatement is an incentive program, the request should be made before construction starts and/or before the equipment is purchased. The Department of Local Government Finance will not approve tax abatement on property and/or equipment that was installed prior to the Town’s approval of the Statement of Benefits (SB-1).
A company must be located within an Economic Revitalization Area (ERA) in order to receive tax abatement. If not, the property owner must request designation as an ERA. Bargersville has approved blanket ERAs for development to streamline the process, however the approval for individual sites is made on a case-by-case basis.
The Town can award up to a 10-year tax abatement on real property improvements (construction of a new facility or expansion of an existing facility) and personal property (purchase of equipment, either new or not previously owned in Indiana). Eligible uses include:
In some instances, a company will lease equipment or a building. In this case, the property tax payer is the entity eligible to request property tax abatement.
A financial tool designed to promote economic development redevelopment. A geographic area designated as a TIF District collects property taxes in two ways:
The TIF Fund is then used to underwrite public infrastructure projects within the TIF District like road improvements and installation/extension of utilities that help spur development. In addition, TIF monies can be used for a variety of private projects as defined by the statute that includes: certain building improvements, equip purchase and/or set-up expenses, land improvements, and/or cost buy-down.
Both taxable and tax-exempt bonds can be used for building construction costs and/or equipment purchases.