Taxation – Part 3

Church Property

Church Law and Tax 1990-01-01 Recent Developments

Taxation – Church Property

A Florida appeals court ruled that a nursing home operated by the Archdiocese of Miami is exempt from state property taxes. Since one-third of the residents at the facility are private paying patients (the remaining two-thirds are Medicare or Medicaid patients), a local tax appraiser argued that only two-thirds of the facility was entitled to exemption. In concluding that the entire property was entitled to exemption, the court cited the following considerations: (1) most of the residents are over sixty-five years of age (a majority are in their eighties); charges owed by private paying patients are routinely written off; patients are admitted on a first-come, first-serve basis, with no preference given to private paying patients; all patients (whether private paying, Medicare or Medicaid) receive the same quality facilities and services; private paying patients who become unable to pay may become Medicaid patients in which case they occupy the same bed and receive the same services; Medicaid and Medicare reimbursements were below the cost of caring for these patients; the home does not make a profit on its private paying patients. These factors, concluded the court, demonstrated the exempt status of the entire facility. The court rejected the tax appraiser’s position that “if there is any patient who somehow has enough income to pay for his or her bed at the home” then that bed must be removed from the exemption, since such an ‘income test’ has reference more to the personal economics of a resident or residents of an apartment or room in a home for the aged than to the overall purpose or use of a home as a religious or charitable institution.” In other words, the focus should be on the charitable object of the facility as a whole rather than on the ability of some patients to pay for their services. This certainly is a sensible conclusion, and one that will be helpful to church-operated nursing homes in Florida and in other states with similar exemption provisions. Markham v. Broward County Nursing Home, Inc., 540 So.2d 940 (Fla. App. 1989).

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