Tax Exemption for Church Property

More and more, we are seeing situations where church property has been sold for delinquent property taxes. When the church realizes that their property is now owned by someone else due to their failure to pay property taxes, the first statement made is “we thought our church property was tax exempt!” While it may potentially be tax-exempt, each state requires different ways to obtain that exemption – and keep it. In some states, you simply have to apply for exemption when the property is acquired and no additional action is ever required again. However, in other states you may be required to have church property re-certified as exempt ever year or every few years.
So, is your church property tax exempt? As a nonprofit, most church property qualifies for exemption based on ownership and use of the property. However, as just noted, you may have to take affirmative action on a regular basis to keep the property exempt from taxes.
It is recommended that you review your church’s tax-exempt status annually. While property taxes and exemptions vary by state, the first of each year is typically a great time to make sure applications for exemption are done and renewals are up to date.
A few suggestions concerning church-owned property:

  • Determine whether or not your church property was tax-exempt last year, based on its nonprofit status. If not, visit your local tax office or their website to see if you may qualify for exemption and complete the application process for future years. However, do not forget to pay the taxes owed if the property was not exempt.
  • To maintain tax-exempt status, confirm there have been no changes to the use of your church property and update any renewal documentation required by your state. Be aware that if you lease out some of your church property, it will most likely lose its’ tax-exempt status.
  • If you purchase new property, determine tax-exempt filing requirements and due dates immediately, and then complete the application process as dictated by your local tax assessor.
  • If taxes are owed on church-owned property or if the property has been sold at a “tax auction,” it is critical that you act quickly. You will most likely have only a limited time to “redeem” the property.

This simple checkup could potentially save your church hundreds, if not thousands, of dollars in tax liability. It should be noted that most states will not apply tax exemption retroactively. Therefore, it is critical this is kept up to date and made a priority each year.


About benefitsboard

Art Rhodes is the President and CEO of the Church of God Benefits Board, Inc. - the administrator of the Ministers' Retirement Plan and the Church Loan Fund, Inc. The corporate offices of the Benefits Board are in Cleveland, TN.
This entry was posted in 02 - February 2023, 2023. Bookmark the permalink.

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