Property Taxes & Non-Profits

<p>The tax status of real or personal property owned or used by charitable non-profit organizations can get complicated when there are multiple private and public entities involved with the property.  Is property exempt if is owned by a non-profit organization and leased to other non-profits? What if it is leased to a mixture of non- and for-profit organizations? Does it matter if the non-profit organizations are 501(c)(3) certified? What if a government owns the property and leases it to a non-profit?</p> <p>This blog attempts to unravel some knotty non-profit problems.  </p> <p>Before we dive into the details of specific situations, here’s a quick overview of the relevant property tax law provisions.</p> <p>Only the General Assembly may create property tax exemptions.  See Article V, Section 2(3) of the N.C. Constitution.   This means that all local governments must play by the property tax rules created by the General Assembly; counties and municipalities are not permitted to get creative and develop their own property tax exemptions.</p> <p>The broadest property tax exemption aimed at non-profits is G.S. 105-278.7.  This exemption covers “real and personal property used for educational, scientific, literary or charitable purposes.”</p> <p>The statute offers definitions for these terms, but they are nebulous at best.  For example, a charitable purpose is defined as “one that has humane and philanthropic objectives; it is an activity that benefits humanity or a significant rather than limited segment of the community without expectation of pecuniary profit or reward. The humane treatment of animals is also a charitable purpose.”</p> <p>Reasonable people can differ on what might qualify as “charitable” under this standard. [...]</p>