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Property Tax Exemption

Are you a church operating in California? Then you may want to take notice of this article.

A church in California has three basic options from which to choose when filing for an exemption from property tax on its “real” and “personal” property:

  1. Church Exemption – restricts the use of the property to traditional church worship purposes only (e.g. it cannot be used for other purposes, even by the church). For example, a church-run daycare center would not be allowed. A church office would not be allowed (though a minimal amount of office use might be allowed, depending on the county assessor). Also, this is generally the only exemption allowed to a church using RENTED premises.
  2. Religious Exemption – allows other related “religious” uses by the church. Allows other churches to co-exist on the property (each church that uses the property on a “regular” basis must individually apply for the religious property tax exemption), and allows other related church activities, such as offices, classrooms, preschool and daycare centers on the site.
  3. Welfare Exemption – permits the church to allow other tax exempt activities and organizations to use the property. But, each tax exempt organization that uses the property on a “regular” basis must also qualify for the property tax exemption by filing for, and having, a welfare exemption of their own. “Regular basis” use is subject to interpretation by each county assessor.

A church owned residence used to house ministerial staff can generally qualify for an exemption from property tax also, provided a welfare level exemption is in place and the property is owned exclusively by the church (i.e. equity shares do not qualify) and used to house a licensed or ordained minister and their family.

Other opportunities for property tax relief may also be available to a church or religious nonprofit. It is best to consult with your tax advisor to determine what exemptions might be available and how best to apply for relief.
One final note, use by outside parties, especially non-exempt organizations and entities, will often negate, in part or in whole, the property exemption of the church.

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