Property Tax Exemption Denied for Vacant Land

Court rules church had no clear use for one-acre tract.

In 1999 a congregation purchased a one-acre tract of unimproved land adjacent to its existing property. Within 90 days of purchase the congregation filed an application for exemption from property tax (for 1999) with the county tax assessor. The application contained the question, “Are buildings planned or under construction?”

The congregation marked an “X” in the “No” response. The congregation approved plans in 2000 to construct a building containing an educational facility with administrative offices and a library and chapel on the newly acquired land. A Washington court ruled that the property was not exempt from taxation in 1999.

The court noted that “the burden rests on the congregation to show clearly that the property is within the exempting statutes during the time at issue (1999).” It concluded that the congregation had failed to meet this burden of proof. State law exempts from property taxation “all churches, personal property, and the ground, not exceeding five acres in area, upon which a church of any nonprofit recognized religious denomination is or shall be built.”

The property tax statute further provides that “to be exempt the property must be wholly used for church purposes.” The court concluded, “Language in a statute must be given its ordinary meaning if not defined otherwise in the statute …. The language of the statute is clear. The ‘shall be built’ exemption applies only to land and buildings which will become ‘churches’ upon completion. The parcel was acquired in 1999. The decision on how to use the new parcel was not taken until the year 2000… . We conclude that for assessment year 1999 (taxes payable in 2000) there were ideas but no decision on how this parcel would be used.” Herzl-Ner Tamid Conservative Congregation v. State of Washington, Bd. of Tax Appeals Dec. 55611 (2001).

This content originally appeared in Church Treasurer Alert, June 2001.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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