Industrial Recovery Tax Credit



Description

The Industrial Recovery Tax Credit provides an incentive for companies to invest in former industrial facilities requiring significant rehabilitation or remodeling expense. The Industrial Recovery Tax Credit is established by I.C.6-3.1-11.

Calculation of Credit

The tax credit amount is equal to the amount of the qualified investment multiplied by the following applicable percentage

  • 15 percent for a plant placed in service between 15 and 29 years ago
  • 20 percent for a plant placed in service between 30 and 39 years ago
  • 25 percent for a plant placed in service at least 40 years ago

The tax credit may be carried over to the immediately following taxable years if the credit exceeds the taxpayer’s state tax liability.

The credit must be applied against the following in the order listed:

  • Adjusted gross income tax liability                
  • Insurance premiums tax liability
  • Financial Institutions Tax

Eligibility

This credit is open to occupants of, or investors in, industrial recovery sites consisting of a building or complex of buildings placed in service at least 15 years ago, with at least 50,000 interior square feet of space that is at least 75% vacant at the time that the application is made. This program is intended to rehabilitate abandoned industrial

facilities which would otherwise not be re-used. In this context, applications must demonstrate that the industrial facility would not be re-used without the tax credit. Projects that would occur regardless of incentives are not eligible. The IEDC seeks to encourage the highest and best use of its incentive programs and will therefore evaluate applications according to the following:

Primary Employers

The IEDC will give preference and priority to applications involving primary employers who intend to create net new, full-time jobs. A primary employer is an employer that produces goods or services that are consumed outside its local market.

Developers

Developers or other entities seeking the tax credit for assignment to a lessee under IC 6-3.1-11-16 are also eligible, with preference and priority given to applications that contemplate a primary employer as the lessee.

Others

Applications involving other types of end users are eligible for consideration. Any tax credit amount awarded will be weighed against the net financial benefit of the project to the State as determined solely by the IEDC..

 

ELIGIBLE “QUALIFIED INVESTMENT” COSTS

 

Per IC 6-3.1-11-10 to -11, rehabilitation means expenditures for the remodeling, repair, or betterment of real property in any manner or any enlargement or extension of real property. 

 

These include:

Acquisition costs, when made to enlarge or extend the industrial recovery site

Architectural fees

Construction management costs

Demolotion costs

Engineering fees

Environmental remediation costs

FF&E, if nonmovable

Permitting costs directly related to rehabilitation

Other Hard costs

 

These do not include:

Acquisition costs, when made to restructure or transfer ownership for reasons unrelated to enlargement or extending the industrial recovery site

FF&E, if movable

Loan costs, e.g., origination and interest

Legal and accounting fees

Developer fees

Feasibility studies

Property insurance

Other professional fees not directly related to rehabilitation of the property

Reserves

Other Soft costs

 

The tax credit may be carried over to the immediately following taxable years if the credit exceeds the taxpayer’s state tax liability. The credit must be applied against the following owed taxes in the following order:

•Adjusted gross income tax liability

•Insurance premiums tax liability

•Financial institutions tax

 

APPLICATION

All applicants must include evidence of financial support from the elected official(s) of the county and/or municipality. Applicants must also clearly indicate all other state or federal grants, tax credits, or other public financing mechanisms sought for the project. The IEDC also reserves the right to request additional information from applicants in order to evaluate the project.

Download Application

 

Fact Sheet

Industrial Recovery Tax Credit