What is a tax abatement/tax phase in?

In Indiana, tax abatement is technically defined within state law as an economic revitalization area (ERA) deduction. The process begins by designating a certain piece of real estate as an ERA. Subsequent investment on that property, within state guidelines, is then eligible for tax abatement. Two types of investments can receive tax abatement - real estate and personal property improvements.

Regarding real property, the purchase of land does not qualify for a deduction; only a structure or building. Abatement is only for the increase in assessed value which means it cannot be applied to the value of existing structures. Activities eligible for abatement include the construction of new structures, additions to existing structures, and the remodel or repair of a structure that results in an increase in assessed value. Deductions for real property can be approved for a period up to ten years, during which, new taxes are phased in, hence the term tax phase-in.

Personal property abatements are for equipment or machinery used for the production, manufacturing, fabrication, assembly, or processing of other personal property. In addition, equipment used for research and development, information technology systems and on-site logistical equipment are eligible for abatement. Used equipment can qualify for abatement if not previously used and taxed in Indiana. Like the real property abatement, deductions for personal property can be granted for a period up to five years with additional years of abatement based upon the size of the project.

Show All Answers

1. What is the County's role in economic development?
2. How does the County interact with economic development organizations (South Bend Regional Chamber, South Bend Elkhart Regional Partnership, Indiana Economic Development Corporation)
3. How does the County interact with other local government economic development entities (City of South Bend, City of Mishawaka, Towns)
4. What is Tax Increment Financing (TIF)?
5. What is an Economic Development Area? How does this relate to TIF?
6. What is a tax abatement/tax phase in?
7. How do I apply for a tax abatement?