Did you know that just because a nonprofit organization is exempt from income tax, does not automatically qualify it to be exempt from property taxes? A general rule is that property is subject to tax unless the organization obtains approval of exemption, even if the organization is a 501(c)(3) public charity. Because property taxes are regulated at the state and local level, exemption from property taxes and how to obtain exemption varies.
Depending on the state, exemption from taxes on both real property (buildings and land) and tangible personal property (equipment, furniture, etc.) may be pertinent to your nonprofit organization. Since most state and local governments tax both types of property, it is important for nonprofit entities to be sure they are correctly exempt to avoid any unnecessary taxes. Filing the appropriate exemption application and forms by the required due date is essential. Certain states do not allow late filing of exemption applications and/or returns. Once the property tax is assessed and billed, it can be challenging to have the tax abated. Following is a brief summary of Indiana, Ohio, and Kentucky exemption rules.
Indiana Exemption Rules
Real property and business tangible personal property used for educational, religious or charitable purposes are eligible for exemption. To obtain exemption, Indiana Form 136 must be filed with the county assessor by April 1 of the assessment year. Once approved, the Form 136 does not need re-filed as long as the property continues to meet the requirements of IC 6-1.1-0-16 or IC 6-1.1-10-21. A change in location or use of the property will require the Form 136 to be re-filed. Annual filing of Forms 103 and 104 for tangible personal property are still required if applicable.
Kentucky Exemption Rules
Real and tangible personal property owned and used by educational, religious and purely public charitable institutions are eligible for exemption. To obtain exemption, Kentucky Form 62A023 must be filed with the property valuation administration of the county. The application does not need re-filed once approved unless the location or use of the property changes. There is no requirement to annually file Form 62A500 for personal property once the exemption has been approved.
Ohio Exemption Rules
There is no tax or filing requirements for business tangible personal property in Ohio. However, real property and facilities used for educational, religious and charitable purposes are eligible for exemption. To obtain exemption, Ohio Form DTE23 must be filed with the county auditor by December 31 of the tax year for which the exemption is sought. Applications should not be filed until the year following the acquisition of the property.
If you have any questions on property taxes and exemptions please contact your local Blue & Co. advisor. For more information, you can also visit your state’s website covering property taxes and exemption.
Indiana – https://www.in.gov/dlgf/8818.htm
Kentucky – https://revenue.ky.gov/Property/Pages/Property-Tax-Exemptions.aspx