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Volume 5 - Opinions of Counsel SBEA No. 103

Opinions of Counsel index

Nonprofit organizations exemption (charitable) (religious) (residence for elderly - Baptist Home of Brooklyn) - Real Property Tax Law, § 421:

The fact that the Legislature, in incorporating the Baptist Home of Brooklyn, has indicated that that organization “shall be entitled to the benefit of the laws relating to charitable institutions” does not in and of itself make the real property of such organization tax exempt. If the property is used for exempt purposes (as defined in Real Property Tax Law, §421), an exemption may be granted provided the other requirements of the statute are also satisfied.

Our opinion has been requested concerning the taxable status of a nursing home being built by the Baptist Home of Brooklyn within the Town of Rhinebeck.

Section 421 (i.e., 420) of the Real Property Tax Law provides an exemption from real property taxation for real property owned by certain nonprofit organizations. The requirements of this section can be summarized as follows:

1. The real property must be owned by a corporation or association organized exclusively for one or more of the purposes listed in section 421;

2. The real property must be used exclusively for carrying out one or more of the purposes for which it is organized, within the ambit of section 421. Any portion of the property not so used is subject to taxation;

3. No officer, member or employee of the organization may be entitled to receive any pecuniary profit from its operations, except a reasonable compensation for his services;

4. No exemption shall be granted if the organization is a guise or a pretense for directly or indirectly making any other pecuniary profit for such organization or any of its members or employees.

When ascertaining whether or not an organization is organized exclusively for exempt purposes, we generally recommend that an assessor examine the organization’s certificate of incorporation as the corporate purpose of the organization will be set forth therein. However, in this case, the Baptist Home of Brooklyn was established by an act of the State Legislature (L.1869, c.144) instead of by means of the State’s corporation laws.

The aforementioned 1869 law states that the object of the organization is to establish within the City of Brooklyn, an institution where the deserving, infirm and needy members of the Baptist churches of that city and of other certain Baptist churches could be provided with a comfortable home, medical care, etc. Section 3 of that act authorized the corporation to purchase and hold real property not exceeding the amount of $200,000.

Chapter 214 of the Laws of 1907 amended section 3 of chapter 144 so as to delete the $200,000 limitation and to indicate that the organization “shall be entitled to the benefit of the laws relating to charitable institutions.”

In 1969, chapter 684 again amended the 1869 law to indicate that the institution referred to in the act could be established on Long Island instead of within the [former] City of Brooklyn. The following year, the law was again amended (L. 1970, c.595) so as to allow the organization to establish its institution anywhere within the State of New York, and to likewise accept residents for the home from among the entire State’s Baptist church members. Clearly then, the organization is now able to establish its home anywhere within the State of New York, and it has apparently chosen to do so within the Town of Rhinebeck.

From the information submitted, it is impossible for us to definitively state that the organization in question is or is not exempt from real property taxation. For example, the fact that the organization appears to be religiously oriented does not automatically entitle its real property to an exemption pursuant to section 421. We have said:

The operation of a facility for the residency or care of aged persons is not a religious activity. Therefore, the fact that the facility is owned by a church is not determinative of its taxable status, and the critical questions which must be asked are how is the facility operated and what is its primary purpose (3 Op.Counsel SBEA No. 16).

Likewise, the mere fact that the Legislature has indicated that the Baptist Home is entitled to the benefit of the laws enjoyed by charitable organizations does not, in and of itself, finally determine the issue. That is, putting aside the question of the organization’s avowed purposes, no exemption will be granted unless the property is actually used for exempt (e.g. charitable) purposes. Had the Legislature wished to grant exempt status to the home, presumably it would have included a tax exemption in the statute incorporating the organization (see, e.g., charter of Salvation Army (L. 1899, c.468) and discussion thereof in 1 Op.Counsel SBEA No. 21).

November 18, 1976

Updated: