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Abandoned buildings are routinely safety hazards that cost cities and towns precious resources by using additional fire and police services, while decreasing area property values.

Definition of an abandoned building

  • at least 66 percent vacant for the past five years
  • nonoperational for income-producing purposes
  • may not be a single-family residence
  • a building listed on the National Register for Historic Places when used solely for storage or warehousing
  • investor using the tax credit may not be the owner at the time of the abandonment

Investment threshold to use tax credit

  • more than $250,000 investment within jurisdictions (cities or counties) with a population over 25,000
  • more than $150,000 investment within jurisdictions (cities or counties) with a population between 25,000 and 1,000
  • more than $75,000 investment within jurisdictions (cities or counties) in local with a population of less than 1,000

 Type of tax credits available

 Income tax credit

  • investor files Notice of Intent to Rehabilitate with the Department of Revenue
  • credit equals 25 percent of actual expenses but the credit may not exceed $500,000 for any taxpayer in a tax year
  • credit must be taken over three years beginning with the tax year the building is placed into service after rehabilitation
  • taxpayer may not claim income tax credit in addition to the Textile Communities Revitalization Act or Retail Facilities Revitalization Act credits

Property tax credit

  • investor files Notice of Intent to Rehabilitate with city or county
  • council must determine, by resolution, the eligibility of the project
  • council must hold a public hearing and approve the project for the credit by ordinance
  • at least 45 days before the public hearing the city or county must notify all affected taxing entities
  • if the taxing entity does not file an objection by the date of the public hearing, then the local taxing entity consents to the tax credit
  • credit equals 25 percent of actual expenses but the credit may not to exceed 75 percent of the real property taxes due on the building
  • credit may be taken up to eight years beginning with the tax year building is placed into service

Timeframe for implementation

  • sunsets December 31, 2025
  • retroactive to January 1, 2013