I previously wrote about real estate tax exonerations, which is a form of real estate tax appeal filed by a church or non-profit organization, requesting that property be made exempt from real estate taxes. It is also possible for a church or non-profit organization to own property that is partially tax exempt and partially taxable. This is commonly known as a hybrid real estate tax appeal.
In deciding whether a specific piece of property should be tax exempt, the board uses a legal test known as the HUP test. The name of this test is derived from the Pennsylvania Supreme Court case which established the test. This is a five factor test which consists of the following elements which the church or non-profit organization must satisfy to be successful in a real estate tax exoneration. They are as follows: 1) Advance a charitable purpose, 2) Donates or renders gratuitously a substantial portion of its services, 3) Benefits a substantial and indefinite class of persons who are legitimate subjects of charity, 4) Relieves the government of some of its burden, and 5) Operates entirely free from private profit motive. In the case of a hybrid tax claim, the board also considers whether the specific piece of property furthers the charitable mission of the organization. For example, a church building and parking lot will commonly be exempt from real estate taxes because they help to further the mission of the church. However, a vacant piece of land also owned by a church will most likely be taxable because vacant land not being used by the church does nothing to further the church’s mission.
In the case of a hybrid tax claim, it is very important to have an appraisal done to determine the value of the property that is taxable and the value of the land that is non-taxable. Typically, if an appraisal completed by a licensed real estate appraiser is presented at an appeal hearing, the board will deem the appraiser’s opinion regarding the value of the taxable and non-taxable property credible and assess real estate taxes based only on the value of the taxable property.
If you are interested in filing a real estate tax appeal, contact one of the experienced attorneys at Trinity Law today at www.TrinityLaw.com. Our firm routinely handles real estate tax matters in York, Lancaster, and surrounding counties.