Application Deadline Nearing for InvestOhio Credit Applications

InvestOhio is a valuable income tax credit program for many taxpayers—but time is running out to apply. The deadline to apply is June 30, 2019. Until that date, you can still utilize it for qualified investments made between July 1, 2017 and June 30, 2019.

Under the InvestOhio program, a 10 percent credit is available for individuals who invest up to $10 million in eligible small businesses, if that investment is held for two years. The credit is a non-refundable personal income tax credit to investors who infuse new equity (cash) into Ohio small businesses to acquire an ownership interest in the company. The small business is required to reinvest that infusion of cash into one of five categories of allowable expenses within six months of its receipt. The investor must retain his or her ownership interest for a two-year holding period before the tax credit may be claimed. The small business must similarly retain the property that it purchased from the cash infusion for the entire two-year holding period.

We have noticed an increased scrutiny of qualifying expenditures recently, particularly for credits for real estate construction projects. Invoices and billing statements must separately itemize labor from materials. If labor is not stated separately, the entire invoiced amount will not qualify, as the credit only applies to expenditures of real and tangible property, not labor. Additionally, construction soft costs (e.g. architectural, engineering, financing and legal fees) which are generally capitalized as real property, are not qualifying expenditures. It is important to ensure your invoice details charges separately, when possible.