Tax Breaks for Rural Property

Business can find tax breaks for locating in a rural setting.

Rural living has its benefits. There are clean, wide open skies, small town atmospheres where neighbors are more like family and the pace of life is a bit slower. And then there's the tax benefits. Most are business-related tax incentives that are aimed at keeping rural lands economically viable. However, there are state-created tax breaks aimed at keeping individuals on rural lands.

Rural Renewal Communities

The federal government extended tax breaks in 2010 through the end of the year for businesses working in designated renewal communities. The U.S. Department of Housing and Urban Development runs the program, which also includes Urban Empowerment Zones. The incentives can include benefits such as employment tax credits and a zero percent tax on capital gains. The idea is to grow job opportunities in these areas, as well as investment in equipment and infrastructure. HUD has maps locating all of the renewal communities in the United States, which includes places like El Paso County, Texas and Clare County, Michigan.

Enterprise Zones

States create their own initiatives to attract businesses to rural areas. They designate Enterprise Zones that provide tax incentives for businesses to locate, invest and provide employment for the residents of these areas. Oregon has 48 rural zones where businesses are exempt from property taxes for new investments. Florida has 30 rural Enterprise Zones, allowing employers to take a credit of between 30 to 45 percent off sales tax, for instance. Nassau County in the northeast corner of Florida offers a qualified target industry tax refund in conjunction with the state. New businesses can receive up to $6,000 in tax credits for every new job created. This assumes that the business creates at least 10 positions that exceed 115 percent of average wages for the state or county, whichever is lower.

Rural Opportunity Zones

Kansas adopted a two-part plan that aims to attract former residents back to the state in 2011. People returning to Kansas must move to one of 50 counties called Rural Opportunity Zones. The residents can waive state income taxes until 2016. The state will also pay $3,000 a year in college debt for five years to recent graduates moving to these selected counties. A similar proposal is being introduced in Nebraska.

Rural Rentals

Rural advocates urge investors to take advantage of the federal government's Low Income Housing Tax Credit. It allows a reduction of federal taxes in exchange for providing capital to build rental units for low-income individuals. This program is touted as a means of building new facilities and rehabilitating older ones. The process for applying can be daunting and the size of the credit is limited to how many low-income persons there are among the residents of the housing produced.

References

• Bloomberg Business Week: Nebraska lawmakers to tackle rural population loss
• The Rural Blog: Kansas governor and legislature offer tax breaks for moving to one of 50 rural counties
• U.S. Department of Housing and Urban Development: Welcome to the Community Renewal Initiative
• Business Oregon: Enterprise Zones
• Enterprise Florida: Welcome to Florida: Innovation Hub of the Americas
• Housing Assistance Council: The Low Income Housing Tax Credits for Nonprofits Developing Rural Rental Housing
• United States Department of Agriculture: Federal Tax Policies and Low Income Rural Households