Abatement

Posted in Finance, Accounting and Economics Terms, Total Reads: 391
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Definition: Abatement

The act of reducing tax faced by any person or company is called as abatement. It can be in the form of reduction in penalties or a rebate.


For example, one of the major expenses to any home owner is a property tax which consumes 2% to 3% of the home's value each year. It's a perpetual cost. Some cities or areas offer property tax abatement or real estate tax abatement to promote real estate and infrastructure schemes for investments. It can benefit for consumers in the form of savings. Property tax abatement can also improve a home's resale value. In one such other example, suppose a historic monument lies in an area and a house owner in that area wants to restore his house, he may be granted property tax abatement. Abatement also happens in a case of overvaluation of houses.

 

Disadvantages

It is generally offered in less desirable neighbourhoods

Property tax bill may rise

People get deceived with abatements and fall into wrong purchases than wished

 

Advantages

It encourages people to restore their houses

 

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