Property Tax Exemptions Video for Nonprofit, Faith-based, Welfare and Veterans’ Organizations

Property Tax Exemptions Video for Nonprofit, Faith-based, Welfare and Veterans’ Organizations


(Background music playing, fades out as Brian
starts speaking) Hello, my name is Brian Salmon. I’m a Property
Appraiser at the Board of Equalization here in Sacramento, and I’d like to welcome you
to this presentation for nonprofits and faith-based organizations. This presentation is designed
to provide an introduction to California property tax exemptions for eligible groups. To begin with, in California, all non-governmentally
owned property is taxable unless specifically exempt per the California constitution. Depending
upon ownership and use, eligible organizations may need to contact the county assessor and,
in some cases, the Board of Equalization as well in order to receive an exemption. When we refer to “property” we’re speaking
of land, improvements to land such as buildings and other structures and business personal
property. Broadly speaking, there are two types of property
tax exemptions: those administered solely by the county assessor and those jointly administered
by the assessor and the Board of Equalization. An example of an exemption administered by
the assessor is the Homeowners’ exemption – whereby a homeowner who owns and occupies
their principal place of residence on January the 1st, may be eligible for a savings of
approximately $70 a year. If you have this exemption, it should be reflected on your
property tax bill. If not, contact your assessor’s office. Another residential exemption is the Disabled
Veterans’ Exemption. A veteran who is 100% disabled, or is being compensated at 100%
because of a service-related disability or disease, or the unmarried surviving spouse
of such a veteran may be eligible for an exemption on their primary residence. The basic Disabled
Veterans’ Exemption was $100,000 in 2006 and has been raised annually. Additionally, claimants
who meet income ceilings may qualify for a higher exemption amount. In 2006 it was $150,000.
This exemption has also been increased on an annual basis. Church exemptions are available for owned
or leased real and personal property used exclusively for worship and parking by a religious
organization. Religious organizations may qualify for exemptions of owned real property
and owned or leased personal property used for worship and other purposes by applying
for a Religious Exemption. The Religious Exemption may also exempt preschools, nursery schools,
kindergartens, schools of less than collegiate grade, or schools that are both collegiate
grade and less than collegiate grade as well as appropriate parking areas. One of the advantages
of the Religious Exemption is that it only requires a onetime filing. Public School Exemptions are available for
property leased by public schools and used for public school purposes including property
used by the University of California or State colleges. Charter schools may also qualify
for the Public School exemption. The College exemption is used by post-secondary
education institutions and may be used for owned or leased real or personal property.
Stanford University, for example, uses the college exemption to exempt its property. There are also exemptions jointly administered
by the Board of Equalization and the county Assessor. These are the exemption for Veterans’
organizations and the Welfare Exemption. The title Welfare Exemption derives from the
fact that the qualifying organization is granted the exemption because of the welfare it extends
to the community. A number of faith based and nonprofit organizations file and qualify
for this property tax exemption. Some qualifying organizations include: Religious
Organizations, Charities, Museums, Theaters, Zoological Associations, Open-Space Preservation
Organizations, Organizations involved with Rehabilitation, Hospitals, Clinics, Low-Income
Housing, Non-Profit Schools, Historical Associations, and many others! The Welfare Exemption is granted when the
organization receives an Organizational Clearance Certificate from the Board of Equalization
and files a Welfare Exemption claim and qualifies with the County Assessor. A wide variety of religious, hospital, scientific
and charitable organizations file and qualify for the Welfare Exemption. This exemption
is used for property owned by a qualifying organization. It is only used for leased property,
if the owner of the property also receives the Welfare Exemption. Section 214 of the Revenue and Taxation Code
states that a qualifying organization must be organized and operated for one or more
of the following exempt purposes: Religious, Hospital, Scientific, or Charitable. To be eligible for the Welfare Exemption,
the claimant must be a nonprofit organization or a Limited Liability Company with non-profit
members. The organization must be organized and operated for one or more of the four qualifying
purposes – religious, hospital, scientific or charitable. The organization must also
have a current exemption letter from the Internal Revenue Service stating that it is a valid
501(c)(3) or a letter from the California Franchise Tax Board stating that it is a 23701(d).
The property for which an exemption is claimed must be used exclusively for an exempt purpose. The Welfare Exemption involves two agencies: The Board of Equalization reviews the organization’s
formative documents and issues an Organizational Clearance Certificate to eligible groups. The local county assessor reviews the property
for qualifying use and issues the exemption. Some of the requirements for an Organizational
Clearance Certificate are: Current Articles of Incorporation filed with the Secretary
of State, Tax Letter from Internal Revenue Service or Franchise Tax Board, Annual Financial
Statements, and Documentation supporting exempt activity. To file an Organizational Clearance Certificate,
visit the Board of Equalization’s website at www.boe.ca.gov. Under “How Do I” click
“Property Tax Information” find “Information About” and click on “Welfare and Veterans’
Organization Exemptions”. You’ll be taken to the Organizational Clearance Certificate
area of the website where you’ll find claim forms and links to more information on the
exemption and the process. With your claim you will need to submit current
Articles of Incorporation filed with the California Secretary of State, a valid Tax Letter from
Internal Revenue Service or Franchise Tax Board, copies of annual financial statements,
and documentation of the exempt activity of the organization. This can take the form of
pamphlets, brochures, newspaper articles or other material supporting the organization’s
exempt activities. Since the assessor may not grant a welfare
exemption until the organization has received an Organizational Clearance Certificate, it’s
important to start the Organizational Clearance Certificate process as early as possible after
acquiring property. Once an organization acquires property that
will be used for exempt activity it should begin the Organizational Clearance Certificate
process as well as complete a Welfare Exemption claim available from the assessor of the county
in which the property is located. Welfare claims are often available on the assessor’s
website or else directly by contacting that office. If the property is to be used for Low Income
Housing, Housing for Elderly or Handicapped or Rehabilitation of Individuals, supplemental
forms in addition to the Welfare Exemption claim are required. These forms, too, are
available through the local county assessor. The assessor will want to know that the entire
property is used for exempt purposes. Please be sure to include any other organization
that may use the property – either on a permanent or temporary basis. Once a Welfare Exemption is granted, the organization
is required to re-file annually by February the 15th. This is an opportunity to inform
the assessor of any changes to the use of the property that may affect the exemption. An organization is only required to file once
for an Organizational Clearance Certificate. However, it is required to file a Welfare
Exemption claim for each property for which it seeks exemption. If the property was acquired prior to January
the 1st, 2009, it must have been used for exempt purposes within 90 days. If the property
was acquired after January the 1st, 2009, it must have been used for exempt purposes
within 180 days. Once the Welfare Exemption is submitted to
the assessor, a representative from that office will visit the property to review its use. The welfare Exemption requires annual filing.
To avoid penalty, the claim must reach the assessor or be postmarked by February the
15th. There is a retroactive provision to the Welfare
Exemption whereby eligible organizations may be able to file for exemption back to the
date of acquisition up to four previous years. The late-filing penalty of $250 per year will
be deducted from any refund of taxes. The assessor will require a Welfare Exemption
claim for each year the organization is filing. As a vital part of the community, exempt organizations
are frequently approached by individuals or groups interested in using their property.
In order to retain a full exemption, outside groups must be exempt and their use of the
property must be for an exempt activity. The use of the property one time a week or
less does not require the outside organization to also file an exemption claim. Use of the property must be incidental, with
no fundraising and the property owner should have a copy of the group’s tax exemption letter
from Internal Revenue Service or Franchise Tax Board. Use of the property more than once a week
requires the outside organization to also file a Welfare Exemption claim. If a property is not completely used for exempt
purposes or it is in excess of what is reasonably necessary to accomplish its exempt purpose,
it may be granted a partial exemption. The assessor’s office will make an annual determination
based on information from the Welfare Exemption claim and site visits to the property. For financial or other reasons, exempt organizations
may decide to lease portions of their property to non-qualifying groups. Those portions will
not qualify for an exemption. The assessor’s office may then grant a partial exemption
prorated on the exempt versus nonexempt use. The value of property used for non-qualifying
purposes is subtracted from the overall exemption. Because of the possible impact on taxes, it
is important that any decision regarding the use of property is thoroughly discussed with
the county assessor. Organizations filing for low-income housing
will also need to receive a Supplemental Clearance Certificate from the Board of Equalization.
The claim will require copies of the grant deed and regulatory agreements or deed restrictions
regarding low-income requirements attached to the property. The following slides illustrate a number of
helpful links. You’ll be able to access them at the end of this presentation. Other useful information is the link for the
Organizational Clearance Certificate and Supplemental Clearance Certificate, Welfare Exemption Claim
forms and Assessor information, seminar schedule, and the ability to link on “Contact Us”. We’d like you to know that we’re here to help
in whatever capacity we can. In addition to the information presented here,
you may also be interested in attending one of our free seminars. Please see our website
for a list of upcoming events. Finally, we want to take this opportunity
to express our appreciation for everything you do for the citizens of California. (Background music fades in…�

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