Church Parking Lots Tax Exempt

Key point: In some states, church-owned parking lots will be exempt from property taxation under a state law exempting properties used primarily for religious worship.

In an important ruling, the Texas Supreme Court concluded that a church's parking lots were exempt from property taxation, despite the fact that they were rented for most of the week to a neighboring business.

An inner-city church owned two parking lots (consisting of 407 parking spaces) that it leased to a neighboring business from 7:30 a.m. to 5:00 p.m., Monday through Friday. The church received annual rent of $111,000 from the lease of its parking lots. A local tax assessor determined that the parking lots were not exempt from property taxes since they were rented to a neighboring business, and the church appealed this decision in court.

A trial court concluded that the lots were exempt, but a state appeals court disagreed. ...