Newer Law Extends Commercial Tax Abatements Through 2025
A law, signed into effect in October of 2020, amends the Commercial Rehabilitation Act and the Commercial Redevelopment Act so that the granting of property tax abatements for qualified businesses continues through Dec. 31, 2025.
Commercial Rehabilitation Act
The Commercial Rehabilitation Act provides a mechanism under which a local unit of government can provide a tax abatement for the rehabilitation or renovation of older commercial properties. The abatement results from freezing the assessed value of a building at its value prior to its renovation.
Under the act a qualified facility located in a special district created by a city, township, or village is exempt from standard property taxes (although not the land or personal property). Instead, the facility is subject to commercial rehabilitation tax, a specific tax that, generally speaking, bases the tax liability of the facility on its value prior to rehabilitation.
The act freezes real property taxes on the building itself at its pre-improvement level for a period of one to ten years (the length depends on the local unit of government).
Commercial Redevelopment Act
The Commercial Redevelopment Act was enacted in 1978 as a companion act to the Plant Rehabilitation and Industrial Development Act, which provides property tax abatements primarily for industrial or manufacturing firms. The Commercial Redevelopment Act provides property tax abatements to commercial enterprises.
Under the act, firms pay a commercial facilities tax instead of regular property taxes; new and replacement facilities pay taxes at a rate roughly one-half the statewide average property tax rate and owners of restored or rehabilitated facilities pay taxes based on the value of the property prior to the restoration.
Prior to the new law, the deadline for the granting of tax abatements was Dec. 31, 2020.