Property Tax Institutional Exemptions
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Property Tax Institutional Exemptions
College
Nonprofit educational institutions of collegiate grade may be eligible for exemption from property taxes through either the College Exemption or the Welfare Exemption. (Colleges that are part of the public school system, such as community colleges, state universities, including the University of California, are exempt under public schools.)
College Exemption
In general, buildings, property, whether owned or leased, and used exclusively for educational purposes by a nonprofit educational institution of collegiate grade, is eligible for the College Exemption from property taxes.
A nonprofit educational institution of collegiate grade is an institution incorporated as a nonprofit college or seminary of learning, which requires for regular admission the completion of a four-year high school course or its equivalent, and confers upon its graduates at least one academic or professional degree, based on a course of:
- At least one year in flight test technology or flight-test science, or
- At least two years in liberal arts and science, or
- At lease three years in professional studies, such as law, theology, education, medicine, dentistry, engineering, veterinary medicine, pharmacy, architecture, fine arts, commerce, or journalism. (Revenue and Taxation Code section 203, subd. (b))
To apply for the College Exemption for property taxes, a claim form must be filed each year with the assessor of the county where the property is located. The claim form, BOE-264-AH, College Exemption, is available from the county assessor. To receive the full 100 percent exemption for property owned or leased on the January 1 lien date, the claim must be filed by February 15.
Welfare Exemption
Section 214(e) was added to allow the Welfare Exemption for college properties used by qualifying welfare organizations. Properties owned by educational institutions of collegiate grade, as defined in section 203 (College Exemption) as well as properties owned by qualifying religious, hospital, scientific, or charitable organizations, are eligible for the Welfare Exemption if the property is used exclusively for religious, hospital, scientific, or charitable purposes and activities and if the property and organization(s) meet all of the requirements for the Welfare Exemption. In the case of a college property, section 214(e) provides that a statement of irrevocable dedication to educational purposes in the college’s articles is acceptable.
Property owned by a college may qualify for the Welfare Exemption if it is used by:
- a church for religious purposes and activities
- a hospital for hospital purposes and activities
- a charitable organization for charitable purposes and activities
However, property owned by a qualifying organization (religious, hospital, scientific or charitable) and used by a college for educational purposes of collegiate grade is ineligible for the Welfare Exemption. Section 214(a) expressly provides that the Welfare Exemption is not to be construed to enlarge the College Exemption.
Exhibition
This exemption provides a property tax exemption for personal property that is brought into the state on a temporary basis for exhibition purposes (see Revenue and Taxation Code section 213). There are no limiting factors as to who may own the property (an individual or an organization, non-profit or for-profit). Owners must file for the property tax exemption if property is located here as of January 1 lien date. Property that is brought in after lien date but is removed prior to the next succeeding lien date does not require an exemption filing.
The exhibition exemption applies only if all of the following conditions are satisfied:
- The property is brought into this State exclusively for purposes of use or exhibition at any exposition, fair, carnival or public exhibit of literary, scientific, educational, religious or artistic works in this State and is used only for these purposes while in this State.
- It is intended to remove the property from the State following its use or exhibition here.
- The property is subject to taxation in some other state or a foreign country while in this State and all taxes due in the other state or country are paid when the exemption is claimed.
The assessor may request documentation from the claimant on this requirement.
To apply for the Exhibition Exemption, a claim form must be filed each year with the assessor of the county where the property is located. The claim form, BOE 270-AH, 20__ Exhibition Exemption, is available from the county assessor. The claim must be filed by 5:00 p.m. on February 15, for the preceding January 1 lien date to receive 100 percent of the exemption.
Lessor’s Exemption
In general, the Lessor’s Exemption is available on certain types of leased property, when the exemption of property taxes benefits the lessee institution in the form of rental reduction or a refund. The Lessor’s Exemption is available to property that is leased, as of the lien date, January 1, for the following uses (see Revenue and Taxation Code section 202.2):
- Public libraries that are free and open to the publicMuseums that are free and open to the public.
- Leased property used exclusively for public schools, community colleges, state colleges, or state universities, including the University of California.
- Leased property used exclusively for educational purposes by a nonprofit institution of higher education.
Additionally, section 206.2, allows the Lessor’s Exemption on property used exclusively for religious worship, including church parking for congregations of 500 or less.
The claimant must annually file a claim form with the county assessor of the county in which the property is located. The lessor, claimant, must provide all information required and answer all questions contained in the claim form, BOE-263, Lessor’s Exemption Claim, on an annual basis. A lessee’s affidavit attesting, under penalty of perjury, that the property is used exclusively for the qualifying purpose must also be submitted (a sample affidavit is located on the reverse side of the BOE-263 claim form). The claim must be filed between January 1 and February 15 in order to receive 100 percent of the exemption for the following fiscal year.
Library
Property used for free public libraries is exempt by the Constitution (Section 3(d) of article XIII of the California Constitution and section 202 of the Revenue and Taxation Code). Libraries that charge admission may qualify for the Welfare Exemption, if their properties are owned and operated by non-profit organizations meeting all the requirements of section 214.
In addition to being free, the library must be open to the general public on a regular basis, and the public must be made aware that such is the case. Thus, there should be a sign on the property indicating the library is open to the general public on a regular, scheduled, ongoing basis. For property tax purposes, regularly open to the public means open to the public not less than 20 hours per week for not less than 35 weeks of the 12-month period immediately preceding the lien date for the year for which the exemption is claimed (see Revenue and Taxation Code sections 217 and 217.1).
The property may be owned or leased, but it must be used as a free public library as of the January 1 lien date. To apply for the Free Public Library Exemption, a claim form must be filed each year with the assessor of the county where the property is located. The claim form, BOE-268-B, Exemption for Property Used by a Free Library or Free Museum, is available from the county assessor (or claim form BOE-263, Lessor’s Exemption Claim, if the property is leased). To receive the full 100 percent exemption for property owned or leased on the January 1 lien date, the claim must be filed by February 15.
Low-Value Ordinance
A county board of supervisors may, under certain circumstances, exempt property that does not exceed a specified (low) value. In some cases, the total taxes, special assessments, and applicable subventions on a property would amount to less than the cost of assessing and collecting them (authorized by Section 7 of Article XIII, Revenue and Taxation Code section 155.20). This ordinance was enacted to recognize the practical reality that, notwithstanding the constitutional requirement that all property be taxed, certain assessments are not cost effective to pursue. In other words, the value of a property is too low to justify the costs of assessment and collection. This exemption is commonly referred to as the Low-Value Ordinance Exemption.
On an annual basis, each county board of supervisors has the discretion to determine the maximum value in which real or personal property in their county can not exceed to qualify for the Low-Value Ordinance Exemption. However, they have no authority to exempt real property with a base year value, or personal property with a full value, of more than $10,000.
The possessory interest (a possessory interest is created when a person or entity uses publicly owned real property which becomes subject to property tax assessment) low-value ordinance is set considerably higher than the real or personal property limit. For a temporary and transitory use in a certain public facilities, the maximum value that a county board of supervisors may exempt under the low-value ordinance may not exceed $50,000 (section 155.20(b)). The allowable facilities include publicly owned:
- Fairgrounds
- Fairground facilities
- Convention or Cultural facilities, which includes publicly owned convention centers, civic auditoriums, theaters, assembly halls, museums, or other civic buildings, that is used primarily for staging any of the following:Conventions, trade and consumer shows, or civic and community events, live theater, dance, or musical productions, artistic, historic, technological, or educational exhibits.
Property excluded from this low value exemption (section 155.20(c)) consists of:
Open space lands and property of historical significance (Article XIII, Section 8)
Immature forest trees planted on lands not previously bearing merchantable timber or planted or of natural growth … (Article XIII, Section 3 (j)).
Non-profit golf courses (Article XIII, Section 10).
Lands owned by local governments that are outside their boundaries (Article XIII, Section 11).
This exemption does not require the claimant to file any claim forms. It is an administrative exemption on the county’s option. For information on the Low-Value Ordinance Exemption, contact the county assessor of the county where the property is located.
Museums
Property used for free museums is exempt by the Constitution (Section 3(d) of Article XIII of the California Constitution). Museums that charge admission may qualify for the Welfare Exemption.
Free Museum Exemption
The Free Museum Exemption is available to property used for museums that are free and open to the general public (see Revenue and Taxation Code section 202 and Section 3(d) of Article XIII of the California Constitution).
The museum must be open to the general public on a regular basis, and the public must be made aware that such is the case. Thus, there should be a sign on the property indicating the museum is open to the general public on a regular, scheduled, ongoing basis. For property tax purposes, regularly open to the public means open to the public not less than 20 hours per week for not less than 35 weeks of the 12-month period immediately preceding the lien date for the year for which the exemption is claimed (see Revenue and Taxation Code sections 217 and 217.1).
The property may be owned or leased, but it must be used for museums as of the January 1 lien date. For purposes of this exemption, museum is defined as a building that the predominant purpose is to house and display objects of lasting value.
The Free Museum Exemption applies only if all of the following conditions are satisfied:
- Admittance to the museum is free; however, if donations are requested, the exemption is still allowed so long as no one is denied admission for failing to make a donation.
- The museum must be used primarily as such, although other uses for meetings, receptions, or a gift shop on the premises that sells museum related items and snacks for the convenience of patrons does not disqualify the exemption.
- The property must be regularly open to the public with regularly scheduled hours.
- The property must be identifiable as a museum with the public being made aware of the use and hours by signs and perhaps advertising such as in newspapers, promotional materials, and/or the telephone book’s yellow pages.
To apply for the Free Museum Exemption, a claim form must be filed each year with the assessor of the county where the property is located. The claim form, BOE-268-B, Exemption for Property Used by a Free Library or Free Museum, is available from the county assessor (or claim form BOE-263, Lessor’s Exemption Claim, if the property is leased). To receive the full 100 percent exemption for property owned or leased on the January 1 lien date, the claim must be filed by February 15.
Welfare Exemption
Museums that charge admission may qualify for the Welfare Exemption. Property used exclusively for the charitable purposes of museums and owned and operated by a qualifying organization is specifically declared eligible for the Welfare Exemption in Revenue and Taxation Code section 214.14
Property used exclusively for the charitable purposes of museums includes property used for activities and facilities related to the primary charitable purpose of museums and reasonably necessary and incidental to those purposes.
Property is not required to be indispensable to the primary charitable purposes of museums.
Property is not used exclusively for the charitable purposes of museums if it is used for activities and facilities not related to the primary charitable purposes of museums and not reasonably necessary or incidental to those purposes.
Property used exclusively for the charitable purposes of museums includes property owned by a nonprofit association or organization performing auxiliary services to any city or county museum in the state and used for the storage of items donated for an annual rummage sale. The storage of such items is not considered a “fundraising activity” as used in Revenue and Taxation Code section 214(a)(3) and the proceeds, after expenses, from the sale of these items must be used to provide support to those museums.
Public School Exemption
Property used exclusively for public schools, community colleges, state colleges, and state universities is exempt from property taxation (article XIII, section 3, subd. (d) of the California Constitution, Revenue and Taxation Code section 202, subd. (a)(3)). The property is exempt from taxation on the basis of its exclusive use for public school purposes. If the property is not owned by the public school, the owner of the property is required to file a claim for the Lessor’s Exemption. If the owner of the property does not claim the exemption, the public school may file the Public School Exemption claim.
A charter school, including a charter school operating as or by a nonprofit public benefit corporation, is exempt from property tax as a “public school.” Propertyused by the charter school is exempt under the Public School Exemption.
To apply for the Public School Exemption, a claim form must be filed each year with the assessor of the county where the property is located. The claim form, BOE-268-A, Exemption for Property Used Exclusively by a Public School, is available from the county assessor (or claim form BOE-263, Lessor’s Exemption Claim, if the property is leased). To receive the full 100 percent exemption for property owned or leased on the January 1 lien date, the claim must be filed by February 15.
Religious Exemption
The Religious Exemption may be claimed on property owned by a religious organization and used exclusively for religious purposes. (See Revenue and Taxation Code section 207.) This includes religious worship and school purposes, including preschools, nursery schools, kindergartens, schools of less than collegiate grade, or schools of collegiate grade and less than collegiate grade. The exemption is also available if another church uses the property part time for religious worship and operates a school, provided that the owner church continues to conduct worship services on the property.
To apply for the Religious Exemption, the church must file claim form BOE-267-S, Religious Exemption, with the county assessor where the property is located. The form is available from the county assessor. To receive the full 100 percent exemption for property owned or leased on the January 1 lien date, the claim must be filed by February 15. For example, to receive the exemption for fiscal year 2007-08, which runs from July 1, 2007, through June 30, 2008, the claim must be filed by February 15, 2007.
You only need to apply one time for the Religious Exemption. Once it is granted, the exemption remains in effect until it is terminated or the property is no longer eligible.
Tribal Housing Exemption
Low-income rental housing owned and operated by an Indian tribe or a housing entity designated by a tribe meeting certain requirements may be eligible for exemption (see Revenue and Taxation Code section 237). This exemption applies if the property and entity meet the following requirements:
- At least 30 percent of the property’s housing units are continuously available to or occupied by lower income households (as defined in Section 50079.5 of the Health and Safety Code or applicable federal, state, or local financing agreements), at rents that do not exceed those prescribed by Section 50053 of the Health and Safety Code, or rents that do not exceed those prescribed by the terms of the applicable federal, state, or local financing agreements or financial assistance agreements.
- The housing entity is nonprofit.
- No part of the net earnings of the housing entity benefit any private shareholder or individual.
Additionally, the property must be owned and operated by either (1) a federally recognized Indian tribe, or, (2) its tribally designated housing entity.
Federally Designated Recognized Tribes: The applicant tribe must be a federally “recognized” Indian tribe. The Bureau of Indian Affairs (BIA) maintains a list of federally recognized tribes on its website (www.doi.gov/bia/tribes/entry.html).
Tribally Designated Housing Entity: A housing entity must (1) be tribally designated by a federally recognized tribe, (2) be nonprofit, and, (3) have no part of its net earnings benefit any private shareholder or individual. An applicant that is a housing entity must provide a resolution from a federally recognized tribe designating it as a housing entity for the tribe.
To apply for the Tribal Housing Exemption, a claim must be filed each year with the assessor of the county where the property is located. The claim forms, BOE-237, Exemption of Low-Income Tribal Housing, and form BOE-237-A, Supplemental Affidavit for BOE-237 Housing-Lower Income Households are available from the county assessor. To receive the full 100 percent exemption for property owned on the January 1 lien date, the claim must be filed by February 15.
Claimants are required to submit the following information with the initial claim:
- Documents establishing that the designating tribe is federally recognized.
- Documents establishing that the housing entity has been designated by the tribe.
- Documents establishing that there is a deed restriction, agreement, or other legally binding document requiring that the property be used in compliance withsection 237, subdivision (a), paragraph (2), subparagraph (A).
Claimants are to provide a description of the property for which exemption is claimed, including the entire project property and the portion for which the exemption is claimed (only the portion
that is occupied by qualified low-income tenants is exempt). If the property includes units that do not qualify for the exemption, the description must list the qualifying and nonqualifying units.
Institutional Exemptions FAQs
