2.206 Deduction for Renovation of Abandoned Buildings as Part of Certified Project

Origin: Corporations and individuals are subject to tax on their taxable net income (under the corporate excise) and taxable income (under the personal income tax), respectively. In determining the applicable tax base, a deduction is provided to corporations and individuals for 10% of the cost of renovating abandoned buildings. The deduction is in addition to any other deduction for the cost of such renovation that is available to corporations subject to the net income measure of the corporate excise or to individuals subject to the personal income tax. Apart from this deduction, renovation expenses incurred with respect to business property are generally deductible as current business expense deductions or as depreciation. Amounts allowed under the renovation deduction might also be included in deductible business expenses or deductible depreciation. Thus, the deduction functions as an extra, or bonus, deduction for renovation expenses. To be deductible, the renovation costs must be incurred with respect to a building (i) located in an economic opportunity area and (ii) designated as abandoned, by the Economic Assistance Coordinating Council (EACC). The deduction is part of the Massachusetts Economic Development Incentive Program (EDIP). The EDIP generally employs local property tax incentives to spur economic development, often in blighted areas. These incentives are available for projects that will create new jobs. In addition to the local property tax incentives, the EACC is empowered to authorize the abandoned building renovation deduction. The revenue lost as a result of the deduction constitutes a tax expenditure.

Origin: M.G.L. c. 63, §38O