Skip universal navigation

New York State Universal header

Skip to main content

Volume 2 - Opinions of Counsel SBEA No. 19

Opinions of Counsel index

Nonprofit organizations exemption (religious) (leased property) (property occupied by caretaker) - Real Property Tax Law, § 421:

A parcel of real property owned by a church and leased to a local farmer for agricultural purposes is not entitled to the exemption provided by section 421 of the Real Property Tax Law since it is not exclusively used for religious purposes as required by the statute.

A two-story house owned by the church and provided as a residence for the caretaker of the church, is not entitled to a tax exemption because such use is not necessary or incidental for carrying out the purposes for which the church is organized.

We have received an inquiry concerning the taxable status of two parcels of real property owned by a church. One parcel is leased to a local farmer for agricultural purposes; the other parcel consists of a two-story home located on a one-half acre lot which is occupied by the caretaker of the church property on a rent free basis.

All real property within the State of New York is subject to taxation, special ad valorem levies and special assessments unless specifically exempted therefrom by statute (Real Property Tax Law, § 300).

An exemption from taxation on real property owned by charitable, educational and religious corporations or associations is provided by section 421 of the Real Property Tax Law. In order to be entitled to the exemption provided by section 421, the real property must be owned by a corporation or association which is organized exclusively for one or more of the exempt purposes specified in such statute, and the real property must be used exclusively for one or more of such exempt purposes. Any portion of the property which is not so used is subject to taxation. In addition, the operation must be on a nonprofit basis so that no member, officer or employee shall derive or shall be entitled to derive any pecuniary profit from its operation.

As a general rule of construction, statutes exempting real property from taxation must be strictly construed against the property owner seeking the exemption. In other words, the right to the exemption must be clearly established according to the statutory provision, and if a doubt exists, then that doubt should be resolved in favor of taxation (Lawrence-Smith School, Inc. v. City of New York, 280 N.Y. 805, 21 N.E.2d 693).

The exemption granted religious institutions has been extended beyond the actual house of worship, for it is well established that the use of a portion of an otherwise exempt building as a residence for an engineer, janitor or servant, who is employed on the premises, does not violate the statutory “exclusive use” provision. The services of such personnel were held necessary for the maintenance of the institution for the purposes for which it was formed (Board of Foreign Missions v. Board of Assessors, 244 N.Y. 42, 154 N.E. 816; Girl’s Friendly Society of Diocese v. City of New York, 144 Misc. 839, 258 N.Y.S. 945; People ex rel. Society of Free Church of St. Mary The Virgin v. Feitner, 168 N.Y. 494, 61 N.E. 762).

In determining whether the property so owned is “used exclusively”, as the statute directs, the courts have held that when the property is used in the furtherance of the exempt purposes so as to constitute an integral or coordinate part in carrying out the overall corporate purposes, it is exempt. It must be made to appear that the use and need of the property by the corporation or institution “is necessary or fairly incidental to the maintenance of the institution for the carrying out of the purposes for which it was organized” (People ex rel. Blackburn v. Barton, 63 App. Div. 581, 71 N.Y.S. 933; see also, People ex rel. Academy of The Sacred Heart v. Commissioners of Taxes and Assessments, 6 Hun 109, aff’d 64 N.Y. 656; People ex rel. Seminary of Our Lady of Angels, v. Barber, 42 Hun 27, 3 St. R. 367, aff’d 106 N.Y. 669, 13 N.E. 936; Y.W.C.A. v. City of New York, 144 Misc. 120, 259 N.Y.S. 62, aff’d 236 App. Div. 665, 257 N.Y.S. 1032; In Application of Thomas S. Clarkson Memorial College of Technology, 274 App. Div. 732, 87 N.Y.S.2d 491, aff’d 300 N.Y. 595, 89 N.E.2d 882; St. Luke’s Hospital v. Boyland, 12 N.Y.2d 135, 187 N.E.2d 769, 237 N.Y.S.2d 308).

The first parcel in question, leased by the church to a local farmer for agricultural purposes, is not entitled to exemption since it is not being exclusively used for one or more of the purposes set forth in section 421.

It is our understanding that the residence provided for the caretaker of the church is physically separated from the church itself, is located some distance from the church, and that the caretaker is required to work a limited number of hours per week (i.e., not on call 24 hours a day). Therefore, it would appear that the primary use of such property furnished as a convenience to the caretaker is residential, not religious. Such use is not necessary or incidental for carrying out the purposes for which the church is organized, and therefore, in our opinion, such property would be ineligible for exemption.

June 12, 1972

Updated: