Tax Abatements

What is a Tax Abatement?

A tax abatement is an agreement between a taxing entity and a tax-paying entity that exempts all or part the increase in the value of real property from taxation for a period of time.

A Tax Abatement Example

  • In the example below, a 5 year 50% abatement was given to a project that tripled its corresponding tax value.
  • The base value, prior to the project, was $5.  After project investment, the tax value is $15.
  • The 50% abatement applies only to the increased value.  In this case, the increased value was $10.
  • After the term of the abatement (5 years), the taxing entity receives 100% of the new taxable value.
  • A taxing entity will never receive less money than prior to the abatement

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