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Property Tax Exemption for Leased Facilities

Church property leased to another nonprofit organization may still be tax exempt.

Key point. The fact that church property is being used for another exempt purpose, such as education, does not necessarily prevent it from being exempt from property taxation.

The Nebraska Supreme Court ruled that a portion of a church's property that it leased to a public school was entitled to exemption from property taxes. A public school began looking for a space to use for a new special education program. At that time, the school's special education students were receiving services in another city and the school sought to provide these services locally. The school identified a local church as the optimal site for its special education program, and the parties entered into a facilities use agreement for $1,325 per month including utilities, for 10 months each year for the next two school years.

The church applied for a 100 percent tax exemption on its real property. The local tax assessor ...

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Posted:
  • November 1, 2009