• Key point. In some states, the property tax exemption for church property only applies to property that is regularly used for religious worship. In other states, the exemption is much broader, and includes any property used for religious purposes.
* A Pennsylvania court ruled that a church’s fellowship hall that was used for weekly Bible study classes constituted “religious worship” and therefore was exempt from property taxes. A church owned a 3-acre tract of land next to its sanctuary. The tract contained a two-story frame structure, originally constructed as a home, to which had been added a fellowship hall and an unfinished addition. In 2002, as part of a countywide reassessment, the county determined that this tract was not exempt from property tax. The church appealed the assessment, asserting that the building was used for religious purposes. The church treasurer testified that the building was used for the following religious purposes: (1) “lock-ins” and other overnight activities for the youth; (2) a weekly Bible study and other church meetings and dinners; (3) wedding receptions; (4) a Boy Scout troop. The court concluded that the entire building plus one-half acre of the adjoining land were exempt from tax because “the primary purpose and use of the structure … is for religious worship and other activities in that building are merely incidental thereto.” The county appealed, noting that state law limited the property tax exemption of church property to “places of regularly stated religious worship, with the ground thereto annexed necessary for the occupancy and enjoyment of the same.” The county claimed that none of the “religious” uses described by the church constituted “religious worship,” and therefore the building and surrounding land were taxable.
A state appeals court ruled that the “fellowship hall” portion of the property was exempt. It noted that “the treasurer testified that the fellowship hall was used weekly for the weekly Bible study. The regularity and constancy of this worship brings the primary use of this part of the building within the standards for a place of regularly stated worship. The fellowship hall, which is primarily used for religious worship is, therefore, exempt.” The court added that an unfinished second floor above the fellowship hall also was exempt, since it was not being used at all. The court acknowledged that the hall was used occasionally for social uses, but this “did not change the fact that its primary purpose is regular worship in the form of Bible study.”
However, the court ruled that the unfinished addition connected to the building was not entitled to exemption. It noted that the treasurer did not testify that it was being used for any religious worship. It quoted from a 19th century decision by the state supreme court: “If religious or public worship have not been held in the place, that place itself has not a character. At some day, distant or near, it may be intended to be used for stated public worship, but the fact that it is not now used strips it of its only title to exemption.”
Application. Several state property tax exemption laws limit the exemption of church property to property that is used for “religious worship.” This is a far narrower exemption than more liberal state laws that exempt property used for “religious purposes.” It is important for church leaders to know which kind of property tax exemption applies in their state. The court in this case was persuaded that a weekly Bible study constituted “religious worship” that rendered the fellowship hall exempt, but other portions of the property were not exempt because they did not meet the “religious worship” test. Connellsville Street Church of Christ v. Fayette County Board of Assessment, 838 A.2d 848 (Pa. App. 2003).
Resource. For the text of the property tax exemption laws of all 50 states, see Table 12-4 in Richard Hammar’s 2004 Church & Clergy Tax Guide, available from the publisher of this website by calling 1-800-222-1840 or by visiting our website, www.ChurchLawandTax.com.
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