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Renewal Communities Tax Incentives
- Applies to federal tax obligations
- Tax incentives available to businesses only
- Consult IRS Publication 954 and your tax professional for more information.
Employment Credit Up to $1,500
Federal tax credit for every qualified employee. Employees must live and work in the zone. There is no limit on employee number.
Commercial Revitalization Deduction (CRD)
Every year, Chattanooga has $12M to award to businesses for accelerated expenses associated with qualifying building projects. Up to 50% deduction allowed in the first year a building is placed into service, or 10% per year for 10 years can be taken from qualified expenses related to acquisition and/or improvement to properties located in the RC Zone that will be used for commercial purposes. Applications are now being accepted and are available under forms and applications.
0% Capital Gains
Profits made from the sale of assets (tangible or intangible) by qualifying businesses that hold the asset for at least 5 years between December 31, 2001 and December 31, 2009. Businesses must employ at least 35% of workforce from within the RC Zone over the 5 years. (IRS forms not available yet; see IRS Pub. 954.)
Increased 179 Deductions
IRC §179 allows you to choose to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. The maximum deduction for Renewal Community businesses is $35,000 higher than other businesses.
Qualified Zone Academy Bonds
Local governments can issue bonds at 0% interest to finance public school programs with private partnerships. Private contribution must equal at least 10% of bond proceeds (IRS Form 8860).
Other Federal Incentives Already Available or Enhanced via RC Initiative
Low Income Housing Tax Credit
10-year federal tax credit for owners of new or renovated rental units that reserve certain percentage for low-income use (IRS Forms 8609 & 8586).
Environmental Cleanup Cost Deduction
Deduct qualified expenses in the year the business pays or incurs the cost (No forms; see IRS Pub. 954).
New Markets Tax Credit
(Consult IRS for more information).
Welfare to Work Credit
(IRS Forms 5884, 8850 & 8861).
Work Opportunity Tax Credit
(IRS Forms 5884 & 8850).
HUD WorkPad--WOTC
Indian Employment Credit
(IRS Form 8845).
Depreciation of Property Used on Indian Reservation
(IRS Pub. 954).
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