Taxation—Church Property

A New York court ruled that a church-owned residence occupied by a non-ordained choir director was exempt from property taxes.

Church Law and Tax 2001-01-01

Taxation—Church Property

Taxation—church property

Key point. A church-owned parsonage that is provided on a rent-free basis to a minister is exempt from property taxation in many states.

Key point. Church-owned property that is used exclusively for religious purposes is exempt from property taxation in most states.

* A New York court ruled that a church-owned residence occupied by a non-ordained choir director was exempt from property taxes, not because it qualified as a "parsonage" but because of the many religious functions that occurred there. For many years, two homes owned by a church were exempt from property taxes on the ground that they qualified as "parsonages." The church’s senior pastor occupied one of the homes, and the church’s music director occupied the second home. In 2000, the tax assessor for the first time questioned the exemption of the home occupied by the choir director. The choir director was a non-ordained layman with special liturgical music training who used the home as a residence in exchange for his services. The choir director was considered part of the church’s liturgical staff, and he participated in all worship services. In addition, he participated in various sacramental needs, including baptisms, marriages, and funerals. The choir director had a secular job in addition to his church duties. The home occupied by the choir director also was used for choir rehearsals, weekly Bible studies, youth retreats, and as occasional housing for visiting clergy. A state court ruled that the church-owned home occupied by the choir director qualified for exemption. However, the court concluded that the home was exempt not as a parsonage, but as property used for religious purposes. It did not qualify as an exempt parsonage since it was not occupied by an "officiating clergyman" as required by state law. The court concluded that while the choir director had numerous religious duties, and often assisted in the administration of the sacraments, he "could not officiate at weddings or funerals and his responsibility was to provide liturgical music for these ceremonies." On the other hand, the property qualified as exempt on the basis of the many religious uses that occurred there. State law provided an exemption for property owned by a religious corporation that is "used exclusively" for carrying out the purposes of the religious corporation. The court concluded,

It is well established that the term "exclusively" in this context means "principally", or "primarily". Consequently, use of the property that is "merely auxiliary or incidental to the main and exempt purpose and use will not defeat the exemption" … . Here, the record demonstrates … that [the home] is used for a variety of primarily religious purposes including choir rehearsals, Bible study classes, retreats and religious meetings. The fact that it is used for residential purposes by the choir director, who provides liturgical music at all weekend services and sacramental ceremonies, and occasionally by visiting clergy, is plainly incidental to the religious purpose of the building …. [This conclusion] comports with the policy of encouraging, fostering and protecting religious institutions because they are "beneficial to the public, and necessary to the advancement of civilization and the promotion of the welfare of society."

Application. Many states exempt parsonages from property taxes. A parsonage is a church-owned home that is occupied on a rent-free basis by a minister who serves the church. As this case illustrates, a church-owned home will not necessarily qualify for exemption as a parsonage if it is occupied by a staff member who is not a credentialed minister, regardless of the religious nature of that person’s duties. On the other hand, it is common for church-owned homes to be used for a variety of religious functions, and according to this court such uses may qualify the home for exemption even if the occupant is not a credentialed minister. Holy Trinity Orthodox Church v. O’Shea, 720 N.Y.S.2d 904 (2001).

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