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| INDUSTRIAL PROPERTY TAX EXEMPTION |
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The Industrial Property Tax Exemption (IPTE) program provides for 100% local property tax abatement for up to ten (10) years on a manufacturer's new investment and future qualifying capital investments. This exemption applies to all improvements to the land, buildings, machinery, equipment and other property that is an integral part of the manufacturing process. This incentive is available only to manufacturers in the state as certified by the Louisiana Department of Economic Development. The tax exempt property must remain on the plant site at all times. Neither land nor any other property that has been previously subject to tax is eligible for this incentive.
Contracts for the IPTE program may be granted for a maximum of five (5) years. There is an option to extend the program for an additional five (5) years but in no case shall the exemption exceed ten (10 years. At the end of the contract period, the property becomes subject to taxation at its "use value" as determined by the local property tax assessor. "Use Value" is not the same thing as traditional "Book Value". On the average, the property will come on the tax roles at between 40% to 50% of its original value at the end of the 10th year. Thereafter, the property would continue to depreciate to a base of 20% of original value and remain on the tax roles at that value until it is taken out of service or removed from the site. Following is a sample calculation of the value of this incentive to a new or expanding manufacturer in Ascension Parish: |
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Original Capital Investment:
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Land- |
$ 1,500,000*
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Building- |
10,000,000
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Manufacturing Machinery & Equipment- |
5,000,000
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Non-Manufacturing Fixtures & Equipment- |
1,500,000*
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Total- |
$ 18,000,000
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*Less Non-Qualifying Investment- |
(3,000,000)
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Net Qualifying Investment- |
$ 15,000,000
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| Year |
Estimated Tax Savings ($)
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| 1 |
223,344
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| 2 |
209,088
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| 3 |
194,832
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| 4 |
180,567
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| 5 |
166,320
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| 6 |
152,064
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| 7 |
137,808
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| 8 |
123,552
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| 9 |
109,296
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| 10 |
95,040
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| Total |
1,591,911
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The above sample calculation is based on the following assumptions:
- All taxable assets have been depreciated at the straight-line rate of 6% per year.
- There have been no additional taxable assets placed in service during the ten year period.
- The millage rate has remained stable throughout the ten year period. Please note that the current average millage rate in Ascension Parish (105.6 mills) was utilized in these calculations. The actual millage rate will differ from this figure.
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