Property Tax Abatement

Property tax abatement in Indiana is authorized under Indiana Code 6-1.1-12.1 in the form of deductions from assessed valuation. Any property owner in a locally designated Economic Revitalization Area (ERA) who makes improvements to the real property or installs new manufacturing and/or research and development equipment is eligible for property tax abatement. Land does not qualify for abatement. Used manufacturing equipment can also qualify as long as such equipment is new to the state of Indiana. Equipment not used in direct production, such as office equipment, does not qualify for abatement.

Property owners must apply for designation to the local governing body, usually the town board, city council, county council or the metropolitian development commission having jurisdiction over the area. Information on the prodecure for designation of an Economic Revitalization Area and the responsibilities of the property owner and local governing body is available by calling the Indiana Department of Commerce.

An abatement deduction application must be filed in the office of the county auditor in the county in which the property is located. (Please see IC 1-6.1-12.1 and 50 IAC 4.2-13.) Failure to file the required abatement application by the due date will result in loss of the abatement.

Real-Property Abatement Calculation: Real-property abatement is a declining percentage of the increase in assessed value of the improvement based on one of three following time periods and percentages as determined by the local governing body.

Term of the Abatement
	1 Year	2 Years	3 Years	4 Years	5 Years	6 Years	7 Years	8 Years	9 Years	10 Years
YR 1	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%
YR 2		50%	66%	75%	80%	85%	85%	88%	88%	95%
YR 3			33%	50%	60%	66%	71%	75%	77%	80%
YR 4				25%	40%	50%	57%	63%	66%	65%
YR 5					20%	34%	43%	50%	55%	50%
YR 6						17%	29%	38%	44%	40%
YR 7							14%	25%	33%	30%
YR 8								13%	22%	20%
YR 9									11%	10%
YR 10										5%

Personal-Property Abatement Calculation: Personal-property abatement is a declining percentage of the assessed value of the newly installed manufacturing and/or research and development equipment, based on a time period and percentages as determined by the local governing body.

Property owners must apply for designation to the local governing body, usually the town board, city council, county council, or the metropolitan development commission having jurisdiction over the area. Information on the procedure for designation of an Economic Revitalization Area and the responsibilities of the property owner and local governing body is available by calling the Indiana Department of Commerce.

An abatement deduction application must be filed in the office of the county auditor in the county in which the property is located. Please see IC 1-6.1-12.1 and 50 IAC 4.2-13. Failure to file the required abatement application by the due date will result in loss of the abatement.

Tax Increment Financing

Tax Increment Financing (TIF) provides for the temporary allocation to redevelopment or economic districts of increased tax proceeds in an allocation area generated by increases in assessed value. Thus, TIF permits cities, towns or counties to use increased tax revenues stimulated by redevelopment or economic development to pay for the capital improvements needed to induce the redevelopment or economic development.

The use of TIF is initiated by the declaration of a tax allocation area by a county, city or town redevelopment commission. Property tax assessments are frozen at predevelopment levels in the allocation area. Municipal bonds are then issued to finance the public improvements. As property values in the allocation area increase as a result of new development, the increment in tax revenues is used to meet debt service on issued bonds. Once the bonds have been paid off, the taxes collected from the allocation area are distributed to the remaining taxing districts.

Bonds payable from TIF may be used to finance the cost of redevelopment and the construction of public improvements in the redevelopment area or for projects that directly serve or benefit that area. Proceeds may also be used for training.

Bond amounts are determined by the size of the project and the amount of the increment available. The 1992 General Assembly passed legislation allowing depreciable personal property (machinery and equipment) to be used in addition to real property in computing the increment.