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Michigan Property Tax Abatements for Industrial Property

Michigan manufacturers should be aware of several tax incentives available to businesses investing in plant and equipment. One of these incentives is the Industrial Facilities Tax (or “IFT”) abatement.

The IFT effectively cuts the property taxes on qualifying industrial equipment or real estate by 50% for up to twelve years; it is really a 100% abatement of the property taxes, which is replaced with the Industrial Facilities Tax at 50% of the tax rate used to calculate the normal property tax liability. Mechanically, it works essentially as a simple 50% reduction in the property tax bill.

Obtaining an IFT abatement is a two-step process. The first step is to have the business location established as an Industrial Development District. The second step is to obtain an Industrial Facilities Exemption Certificate. Both of these steps are accomplished through the local municipality’s governing body (the city council, for example). The local governing body makes the decision whether to establish the Industrial Development District, as well as the decision as to whether a tax abatement will be granted and for how many years the abatement will last. The County and State have some review powers, but the process is mostly left in the hands of the local government decision makers.

Not all property qualifies for the abatement under the IFT scheme, and there are very strict rules about when the approval of both the Industrial Development District and the Industrial Facilities Exemption Certificate must be obtained, relative to the construction of the building or the delivery of the equipment. It is a good idea to look into the possibility of getting an IFT abatement as early in the process as possible, to ensure the various deadlines are not missed.

If you are doing business in Michigan and considering the construction of a new industrial facility, constructing an addition to an existing industrial facility, or purchasing machinery and equipment for use in an industrial facility, a Penzien & McBride, PLLC attorney can assist in determining your eligibility for this tax abatement (or others), and can assist in the process of getting your Michigan facility and business assets qualified if you are eligible.