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NEW YORK CITY-A new Liberty Zone designation up for a House vote would bring for $6.1 billion in tax breaks to Downtown businesses struggling to rebuild in the aftermath of Sept. 11.

The designation, if approved, will speed reconstruction of commercial buildings affected by the World Trade Center bombings by reducing the depreciation life of leasehold improvements from 39 years to five years. It also offers a laundry list of tax incentives to spur investment in the area. The combination is designed to give building owners an incentive to renovate affected properties quickly.

The bill also allows for $15 in tax-exempt bonds to finance renovation and construction of Downtown commercial buildings. In addition, whereas in most cases the cost of an investment is deducted over time, development costs within the zone will be eligible for an immediate 30% reduction for tax depreciation purposes.

The legislation allows small businesses within the zone to take an additional $35,000 annually in business deductions for certain investments. In addition, insurance proceeds paid to businesses impacted by the bombings will not be subject to tax if they are used within the city over the next five years.

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