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Atlanta Renewal Community Credits Incentives

Wednesday, October 24th, 2012

Atlanta was designated by the U.S. Department of Housing and Urban Development (HUD) as a Renewal Community (RC) along with 40 other communities nationwide. In the Renewal Community, tax incentives and credits are available to spur economic development and job growth.

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Renewal Community Wage Credit

Business with employees that live and work within the RC boundaries

Credit against Federal taxes up to $1,500 for each year of RC designation for every employee (existing and new hire) who lives and works in the RC area. Tax credit for 15% of first $10,000 in wages per employee may be taken annually through 2009. Unused credits can be carried back one year or forward for up to 20 years.

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Commercial Revitalization Deduction

Property owners who substantially renovate an existing building or develop a new building for commercial use within the RC.

An accelerated depreciation deduction period for commercial real estate property, either new construction or substantial (more than adjusted basis) rehabilitation. The taxpayer/property owner can choose one of two methods to use this incentive: depreciate 50% of qualified capital expenditures in the year the building is placed in service then depreciate the remaining balance over 39 years or depreciate 100% of the qualified capital expenditures over a 120-month period. This incentive is limited to $10 million per project. The property owner must receive the allocation of the deduction from the state-designated Commercial Revitalization Authority.

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Capital Gains Exclusion

“Renewal Community Business” as defined by the Internal Revenue Code: 85% of property in RC, 50% of gross income from RC, 35% of employees live in RC.

Allows a 0% capital gains rate for RC assets held for a minimum of 5 years. An asset could include tangible property in the RC, stock, capital interests or profit interests in a RC Business acquired for cash. The rate applies to gains after December 31, 2001 and before January, 1 2015. The taxpayer is not required to sell the asset in 2015, but must determine and substantiate the gain for that period.

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Increased Section 179 Deduction

“Renewal Community Business” as defined by the Internal Revenue Code: 85% of property in RC, 50% of gross income from RC, 35% of employee live in RC – with less than $200,000 in new equipment needs annually.

Up to an additional $35,000 immediate depreciation expense for machinery or equipment, including computers, placed in service in that year. For example, the incentive allows an “RC Business” to take up to a total of $285,000 “write-off” in 2008 on Form 4562.

For more information, visit the Atlanta Development Authority web site.