Portions of Religious Group’s Property Taxable, Court Rules

Decision based on property use.

Church Law and Tax 1996-11-01

Taxation-Church Property

Key point. The courts in many states have the authority to “apportion” property owned by religious organizations into portions that are exempt from property tax and portions that are not.

The New Hampshire Supreme Court ruled that only portions of the property owned by a religious organization were exempt from property tax. A religious group owned a number of parcels of property, containing a chapel, classrooms, offices, a parsonage, dormitories, a dining hall, agricultural land, wooded land, and vacant land. The land was used for a variety of purposes-by members of the organization who lived and worked on the premises; by visitors and students who occupied the property for religious purposes; by visitors whose presence did not relate to the organization’s religious purposes; and by members who lived on the premises but who worked off—site and who paid rent to the organization. A tax assessor determined that only the chapel, dining hall, offices, a classroom building, and the land immediately surrounding these buildings was exempt from tax. The organization appealed. The state supreme court upheld the assessor’s determination. It rejected the organization’s argument that the state property tax exemption statute did not allow apportionment, and therefore all of its property was exempt from tax. While the statute did not specifically provide for apportioning property between exempt and nonexempt uses, the courts have the authority to make such a distinction. The court also rejected the organization’s claim that all of its property was used for religious purposes. While the court acknowledged that agricultural pursuits were important to the organization, it also noted that nearly 70 percent of the organization’s members did not live on the property or engage in agricultural pursuits, agricultural pursuits were not required by the organization’s religion, and many of the visitors who resided in the dormitories were not members. Appeal of the Emissaries of Divine Light, 669 A.2d 802 (N.H. 1995). [ State Property Taxes]

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