Maintain documentation proving eligibility.

1. Iowa Investment Tax Credit

   An investment tax credit of 10% of the purchase price of real property including any buildings and structures located on the real property, cost of machinery and equipment and the cost of improvements to real property is available to an eligible business. Any credit in excess of the tax liability can be carried forward seven years or until used, whichever comes first. If you are a partner, shareholder, member, or beneficiary in a partnership, Subchapter S Corporation, Limited Liability Company, estate or trust, you may claim the investment tax credit for the qualifying entity. The amount of the credit to you is based on your pro rata share of the individualís earnings of the qualifying entity.

   If, however, the eligible business sells, disposes of, razes, otherwise renders unusable all or a part of the land, buildings, or other existing structures within five years of purchase, the investment tax credit must be recaptured in the year that all or a part of the property is sold, disposed of, razed, otherwise rendered unusable. The percentage of investment credit that is recaptured is from 100% if the property is sold, disposed of, razed, otherwise rendered unusable in the first year to 20% if the property is sold, disposed of, razed, otherwise rendered unusable in the fifth year.

2. Eligible Housing Business Credit

   An eligible housing business may claim an income tax credit up to a maximum of 10% of the new investment which is directly related to the building or rehabilitating of homes in an enterprise zone. The credit is based on a maximum of $140,000 for each single-family home or for each unit of a multiple dwelling.

   This credit was established in HF 2538 of the 1998 General Assembly.

   For more information on enterprize zone benefits, contact the Iowa Department of Economic Development.

3. Eligible Development Business Credit

   An eligible development business may claim a tax credit of 10% of the new investment that is directly related to the construction, expansion or rehabilitation of building space to be used for manufacturing, processing, cold storage, distribution or office facilities. The tax credit may be claimed in the tax year in which the construction, expansion or rehabilitation is completed. The investment credit can reduce the individual income, corporation income, franchise or insurance premiums tax.

   More detailed information is available in the Iowa Department of Revenue 2001 Legislative Summary.

Back