To look up your property by address to see if it is in the Renewal Community visit HUD's RC address locator.

Or, take a look at our Renewal Community Map.

Renewal Community Employment Credit

A business that is located in the RC district can receive RC wage credit of up to $1,500 per year for each employee they hire who lives and works in the RC district. Wages are the wages that are subject to the Federal Unemployment Tax Act (FUTA). This Tax Credit directly reduces the tax liability of a business. It applies to existing as well as new businesses that are located in or will be relocating to the Renewal Community district if they are or will be employing residents who live in the RC district. Unlike other RC incentives, an employer does not have to meet the stricter definition of a Renewal Community Busines to earn this tax credit.

Increased Business Deduction

This deduction allows a business to deduct all or a part of the cost of certain property, such as machinery and equipment, in the year in which it was put in service. This is sometimes called "Expensing". There are limits to the amount you can deduct through "expensing" each year; however, under Section 179 of the Code, a "Renewal Community Business" may take an additional expense deduction on purchases of tangible equipment for use in a Renewal Community. An additional deduction of up to $35,000 per year may be taken. A Renewal Community Business must meet the following tests each year in order to be eligible for the increased business deduction:

• Actively conducts business in the RC. At least 50% of its income was derived from the active conduct of business in the RC
• Most of its tangible property is located in the RC
• Most of its intangible property is used to conduct its business
• Most of the services performed by its employees occurs within the RC
• At least 35% of the business's employees reside in the RC
• No more than 5% of the property is nonqualified financial property (such as debt or stock)
• No more than 5% of the property is works of art or collectibles unless held for sale

Commercial Revitalization Deduction

A business or developer that performs either new construction or rehabilitation of commercial property in the Renewal Community (RC) can deduct a portion of the costs of acquisition, new construction and/or rehabilitation over a shorter period of time than allowed under the standard depreciation rules. The deduction is based on “Qualifying Revitalization Expenditures” or QRE’s. A business can elect either a deduction of 50% of such QRE’s for any one project in the year the building is placed in service OR can deduct 100% of QRE’s pro rated over 10 years.

Commercial Revitalization expenditures are related to the costs of a new or a substantially rehabilitated building. A “substantially rehabilitated building” means that within a 24-month period, rehabilitation/construction expenditures must exceed the greater of either the adjusted basis of the building/property or $5000. Acquisition costs cannot exceed 30% of the total QRE’s, determined without regard to the acquisition costs. The deduction cannot be used for real estate speculation. The deduction cannot be taken residential rental property, however, in some cases a mixed used development might qualify.

Each project is allocated a share of the $12 million annual limit based on such factors as full-time job creation, community participation, and relationship to the strategic plan for the RC. No one project can exceed $10 Million.

Please contact our office for application to the CRD. Applications for projects put in service this year must be received no later than close of business on October 16, 2006.

Zero Percent (0%) Capital Gains

If a business holds a Renewal Community Business asset acquired after December 31, 2001 and before January 1, 2010 for a minimum of five (5) years, the business does not have to include any “qualified capital gain” from the asset’s sale or exchange in its gross income. Only gain attributable to the period from January 1, 2002 through December 31, 2014 may be excluded for RCs.The zero percent capital gains rate is not available for transactions between related parties, such as children or other relatives. Similar restrictions apply to sales to majority shareholders and partners of the business. The business must meet the definition of a Renewal Community Business for substantially all of the 5-year holding period. “Substantially all” generally means 85% of the time period. This exclusion applies only to an interest in, or property of, certain businesses operating in the Renewal Community. The following qualify as RC assets:

• RC business stock
• RC partnership interests
• RC business properties

Primary Contact:

Maria Dickinson, Economic Development Officer

Phone: (978) 446-7200 x1435