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Volume 3 - Opinions of Counsel SBEA No. 29

Opinions of Counsel index

Municipal corporations exemption (property acquired by tax deed) (liability for school district taxes and fire district charges) - Real Property Tax Law, §§ 406, 490:

Real property owned by a municipal corporation and acquired by tax deed is deemed to be held by it for a public use for a period of three years from the date of the deed. During such period, the property is exempt from taxation and special ad valorem levies, but is liable for school taxes and special assessments. If the municipal corporation is receiving revenue from such property on taxable status date, there is no exemption. If the property is located within the corporate limits and held for public use, it is exempt from taxation and special ad valorem levies and special assessments to the extent provided in section 490.

We have received an inquiry requesting an interpretation of subdivision 5 of section 406 of the Real Property Tax Law in relation to real property owned by a county and acquired by tax deed. The question is whether such property is liable for school district taxes and fire district charges.

Subdivision 5 of section 406 provides that real property owned by a municipal corporation (i.e., a county, city, town, village or school district, Real Property Tax Law, § 102(10)) acquired by tax deed is deemed to be held by it for a public use for a period of three years from the date of the deed. This subdivision further provides that during such period the property is exempt from taxation and special ad valorem levies but is liable for taxes for school purposes and special assessments. Any such property from which a municipal corporation is receiving revenue on taxable status date is not so exempt.

Therefore, pursuant to the provisions of subdivision 5, a county holding title to property acquired by tax deed is liable for school district taxes on such property, but is not liable for fire district charges to be raised by a special ad valorem levy. Where the municipal corporation is deriving revenue from such property it loses its exempt status.

However, attention is also directed to subdivision 1 of section 406 which provides that real property owned by a municipal corporation located within its corporate limits and held for a public use shall be exempt from taxation and exempt from special ad valorem levies and special assessments to the extent provided in section 490 of the Real Property Tax Law. It should also be noted that taxation is defined to include a charge imposed on real property for school district purposes (Real Property Tax Law, § 102(20)).

Accordingly, where a county owns real property, whether title is acquired by tax deed or some other means, and the property is held for a public use, such property is exempt from taxation which includes school district charges, and is also exempt from charges for a special district improvement or service which would include a fire district charge.

October 16, 1973

Updated: