Abatement can be defined as a reduction in the tax rate or tax liability that is applied to an individual or a business entity.
Example of Abatement
The major and most profound examples of abatement come in the case of property taxes however in certain cases the word abatement is also used to refer some overdue debt. The example of abatement can be explained by assuming the case of an individual whose owe a house. The property tax on the house is approximately $4,000 per year. However the house of the individual is very old and he was able to get his house added to the National Register of Historic Places. The reason behind this registration was that Thomas Jefferson once slept over there in his house. Due to its historical background the Government gave tax abatement to the individual by reducing his tax to $500 per year only.
Importance of Tax Abatement
Tax Abatement is important as it sometimes provide an incentive to the individuals to do certain things with their property in order to get reduction in their annual tax. For example tax abatement can be an incentive for an individual to revitalize a struggling neighborhood, restoring a historical place, operating a business or a non-profit organization at the house or conducting any such activity that result in the overall betterment of the society.