Evaluate Property Tax Exemptions Annually

In many states, the first part of the year is the time to address property tax exemptions.

Most jurisdictions provide relief from property taxes to qualifying churches that own real property (e.g., land and buildings) and/or personal property (e.g., furniture, equipment, leasehold improvements) located in that jurisdiction. Generally, exemptions are based on the ownership and use of the property, although different states have different rules regarding what types of entities and what uses qualify for exemption.

While property taxes are assessed and exemptions are evaluated differently in various states, in many states, the early part of the year is the time to address property tax exemption applications or renewals. Therefore, if your church has not already done so, Batts Morrison Wales & Lee recommends reviewing the practical reminders and recommendations below to determine whether further analysis and evaluation of your church’s property tax exemptions are required.

Practical Reminders and Recommendations

  • Review your church’s prior year tax bill or online account to determine whether the church has historically received exemption based on its nonprofit status. If not, consider whether the property might qualify for exemption and, if so, the related exemption application filing requirements and due dates.
  • For property that has historically been granted an exemption, determine the implications of any changes to the use of that property, along with the related notification requirements.
  • Determine the potential filing requirements and exemption application due dates resulting from the purchase of new property.
  • If uncertain about the available exemptions in your state, consider contacting your local taxing jurisdiction (or visiting its website) to anonymously inquire about potential property tax exemptions that may be available to your church (specifically inquire about any property tax exemption application deadlines and the necessary documentation that must be submitted in order to qualify).
  • Contact your tax counsel if you are being notified that your property tax exemptions are being reduced or removed for the upcoming tax year, or if you need assistance in addressing any of the property tax exemption issues noted above.

Understanding the available exemptions and the necessary filing requirements is proving to be more important than ever for churches. Our firm has noticed a recent trend in denials of property tax exemptions in numerous jurisdictions across a number of states as cities and counties look for ways to meet operating budgets.

Adapted from a Nonprofit Special Alert originally published by Batts Morrison Wales & Lee (BMWL). Used with permission.

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