Navigating Connecticut’s Commercial Real Estate Tax Incentives 

The following article was provided by Whittlesey. It is reposted here with permission.

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Connecticut provides a variety of tax incentives aimed at encouraging commercial real estate investment, property development, and business expansion or relocation within the state. 

These incentives are designed to stimulate economic growth, revitalize communities, and support job creation. 

Understanding these programs can help businesses and investors maximize their investments while reducing their tax burden. 

Here’s a guide to navigating Connecticut’s key commercial real estate tax incentives as of February 2025. 

Enterprise Zone Benefits

Connecticut designates certain distressed municipalities and urban areas as enterprise zones to encourage economic revitalization. 

Businesses investing in property development or improvement within these zones can benefit from: 

• A five-year, 80% property tax abatement on qualified real estate and personal property improvements
• A 10-year, 25% corporate business tax credit directly attributable to the business facility within the zone

Urban and Industrial Site Reinvestment Tax Credit Program 

This program encourages large-scale real estate investments in urban and industrial areas. Eligible projects may receive: 

• Tax credits covering up to 100% of the approved investment over a ten-year period
• Qualification for projects investing at least $5 million in distressed communities or $50 million elsewhere in the state

Manufacturing Assistance Act Tax Incentives 

The MAA offers incentives specifically for businesses involved in manufacturing, distribution, and logistics, including: 

• Grants and low-interest loans to support facility expansion, equipment purchases, and job growth 
• Tax exemptions on certain real and personal property improvements 

Historic Preservation Tax Credits 

Businesses rehabilitating certified historic buildings for commercial or mixed-use purposes may be eligible for substantial state and federal tax credits: 

• Connecticut provides a 25% credit on qualified rehabilitation expenses, increasing to 30% for projects incorporating mixed-use residential development
• An additional federal historic tax credit of 20% is available for qualified rehabilitation costs

Brownfield Remediation Tax Incentives 

To support the redevelopment of contaminated or abandoned sites, Connecticut offers incentives such as: 

• Grants covering up to 50% of eligible remediation expenses
• Property tax abatements and credits directly related to environmental cleanup
• Sales and use tax exemptions for remediation-related costs

Opportunity Zones

Under the federal Opportunity Zone Program, investors who direct capital into designated Connecticut Opportunity Zones can benefit from: 

• Deferral of capital gains taxes on prior gains that are reinvested into Qualified Opportunity Funds until the investment is sold, exchanged, or December 31, 2026, whichever comes first

• Potential reduction of reinvested capital gains through a step-up in basis if certain criteria are met

Legislative Developments 

As of early 2025, Connecticut continues to propose additional incentives: 

• Commercial-to-Residential Conversion Tax Credit (SB 778): Proposed legislation aiming to provide tax credits for converting commercial or industrial buildings into residential or mixed-use properties, with at least 10% designated as affordable housing. 
• Governor’s Budget Proposals: Gov. Ned Lamont’s 2025 budget includes increasing the property tax credit against personal income taxes and extending certain corporate tax surcharges. 

Real Estate Investment Considerations 

While these incentives present significant opportunities, investors and businesses should carefully consider the following steps: 

• Consult with tax and financial advisors to ensure eligibility and compliance 
• Stay informed on legislative developments, as incentives and eligibility requirements may evolve 
• Coordinate closely with local economic development offices for additional resources and support

Connecticut’s commercial real estate tax incentives offer strategic opportunities for businesses seeking growth and revitalization in the state. 

Whether focused on historic preservation, brownfield redevelopment, or urban revitalization, awareness and strategic application of these programs can greatly enhance project outcomes and community impact. 

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About the author: Melissa Braun is a partner in Whittlesey’s Hartford office, with over 10 years of experience in public accounting. Braun is dedicated to providing tax planning, tax provision, and tax return preparation services to a corporate client base that includes financial institutions. Her background also includes real estate, low-income housing, construction, manufacturing, and closely held businesses.