• Key point. A church-owned parsonage may qualify for exemption from property tax even if it is no longer occupied by a minister, so long as it is regularly used for church purposes and is reasonably necessary for the accomplishment of church purposes.
The Minnesota Tax Court ruled that a church-owned rectory was exempt from property tax even though it was no longer occupied by the parish priest. A Catholic church owned a rectory consisting of living quarters and office space next door to the church. The rectory was previously used as the residence for the priest assigned to the church. Although the priest no longer resided in the rectory, he regularly conducted church business in the rectory’s office. This business included clerical and administrative business, as well as providing instruction to converts, marriage counseling, and marriage instruction. A married couple resided in the rectory living quarters. The couple was responsible for performing janitorial, general maintenance, lawn care, supervision, and security duties to both the rectory and the church in exchange for residing in the rectory. A tax assessor determined that the property was no longer exempt from property tax, and the church appealed. The tax court concluded that the property was exempt. State law exempts from property taxation “all churches, church property, and houses of worship.” The court concluded:
The issue of entitlement of church owned property to an exemption has infrequently been addressed by this court, but the test is whether the property is devoted to and reasonably necessary for the accomplishment of church purposes. Upon the record before us, we conclude that the property is reasonably necessary to the accomplishment of church purposes …. [T]he couple resides in the rectory in exchange for providing custodial and security services for the church. Furthermore, there are additional uses of the rectory by the church priest, including clerical and administrative business, as well as providing instruction to converts, marriage counseling and marriage instruction. The [assessor’s] only contention is that the couple is also employed outside the church and this outside employment is not church related. We find no support for this contention under case law or the exemption statute. We find the rectory is exempt because its use is reasonably necessary for the accomplishment of church purposes.
Application. This case suggests that church-owned parsonages may qualify for exemption from property tax even if they are not occupied by a minister, so long as the property is “reasonably necessary for the accomplishment of church purposes.” In this case, this test was met because of the activities that the priest conducted in the rectory’s office. Sacred Heart of Brewster Catholic Church v. County of Nobles, 1998 WL 832408 (Minn. Tax 1998).
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