Real Property Tax Exemptions at Risk

September/October 2008

Nonprofit organizations must tread carefully through a landmine of taxing statutes. Although it is generally correct to state, as many assume, that securing a tax-exempt determination of Section 501(c)(3) status immunizes a nonprofit from most federal and state impositions, an important exception is often overlooked. Exemption from state and local property taxation is a substantially separate regime. Exemption requirements are different, frequently more stringent, and often depend on unfamiliar, cramped constructions of familiar terms (e.g., “educational” and “charitable”). Even when such property exemptions are obtained, they are transitory to a degree unparalleled in the income tax world.

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