When speaking about commercial real estate, almost invariably, the topic of abatement comes up at some point. Essentially, a tax abatement refers to the reduction of your commercial real estate taxes or some exemption granted to the individual business owner or the business itself.
Common examples include tax decreases in your Tennessee commercial real estate taxes. If you or your business incurred a tax penalty, an abatement could be requested to reduce the penalty for some allowable reason.
An abatement could also be a rebate, especially for overpayments or tax bills that are too high.
Why do they exist?
Tax abatements are used by local governments to encourage and reward specific activities. For example, giving a tax abatement for capital investments could spur investment into an area that needs revitalization.
Alternatively, allowing a tax abatement for a tax penalty incurred inadvertently or for some allowable reason can ensure that local businesses are not taxed out of existence, especially in these trying times.
Sometimes, cities or counties use tax abatements for long-periods to get companies to relocate headquarters or open new production facilities that will require local hiring. Again, this can spur revitalization or help increase/continue economic growth. You can even buy property that already has one of these abatements.
Can I qualify for an abatement?
Whether or not you qualify for an abatement now or can qualify for one in the future is a fact-specific question that will vary based on a variety of factors. This is why many businesses consult with a commercial real estate attorney to see how they can make their local tax authority work for them.