Key point. The tax-exempt status of church property generally is determined by the actual use of the property on the "tax assessment" date.
A New Jersey court ruled that a commercial building purchased by a church as the site of a new sanctuary was not entitled to exemption from property taxation since the property was in the process of being renovated on the tax assessment date. A church and parking lot were exempt from local property tax. However, as the congregation grew, it sought opportunities to expand its facilities. In September 2009, the church purchased property (the "adjoining property"). Prior to the sale, the adjoining property was improved with a commercial warehouse.
Sometime between 2009 and 2012, the church filed an application for local property tax exemption for the adjoining property. The city denied the application, and the church did not appeal the denial.
The church claimed that from 2009 through 2011, it used the property in furtherance of its work, including an "extension of its regular religious activities," including for "ceremonial activities, religious services during mild weather months, youth rallies, women's rallies, fundraising activities, fairs and storage of various items associated with church functions."
Beginning in late 2011, the church began a series of significant renovations and improvements to the property to convert it from a commercial warehouse into a large sanctuary, offices, and meeting space. Building permits were issued for the interior construction and renovation, including building, framing, electrical, plumbing, mechanical (installation of heating, ventilation, and air conditioning systems), and installation of fire protection apparatus. Soon thereafter, construction of the renovations and improvements to the subject property began.