The interest must be a business or investment located within the enterprise zone.
No registration or fee is required.
What is it?
Individuals purchasing an ownership interest in a business in the zone may be eligible for a credit of up to 30% of the investment on their state tax liability. The exact percentage depends on the following:
Type of business (manufacturer, retail, professional, high technology, or warehouse)
Amount of investment in real estate and personal property
Number of new jobs and % reserved for zone residents
How to claim it
Approval from the Indiana Department of Commerce must be obtained in advance of the investment. The Department will determine the percentage to be applied toward state tax liability.
An individual or business may take a credit of 5% of the interest income received from a qualified loan made to a zone business or resident. The loan must apply to purposes directly related to the business or increase the assessed value of real property in the zone, including residential property. Home purchase loans and loans for repairs may not qualify.
The lender does not need to be located in the zone to claim their benefits.
The lender must register with the State Urban Enterprise Zone Board and the Lafayette Urban Enterprise Association to claim benefits. To register, the lender must file a registration form (Form EZB-R) by May 31 of each year and pay a participation fee. The participation fee is a percentage of the tax benefits claimed. The participation fee for the LUEA is 35% of total zone tax savings. The lender must also pay a percentage (1%) to the State Urban Enterprise Zone Board if the zone tax benefits claimed exceed $1,000.
How to claim this benefit...
It applies against a number of tax liabilities including gross income tax, adjusted gross income tax (excluding any county income tax), supplemental net income tax, insurance premiums tax, and financial institution franchise tax. Complete Schedule LIC and attach to individual or corporate tax return.
The investor does not need to be a zone resident or have a business in the zone but must be investing in or loaning money to a zone business or resident for purposes mentioned above. Certain reinvestment requirements may apply. Contact LUEA for details.