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Volume 5 - Opinions of Counsel SBEA No. 98

Opinions of Counsel index

Business investment exemption (ownership) (leased property) - Real Property Tax Law, § 485-b:

Real property constructed, altered or improved and leased for the purpose of commercial, business or industrial activity may qualify for the exemption authorized by section 485-b of the Real Property Tax Law despite the existence of the lease, provided the other requirements of this section are satisfied.

We have received an inquiry relating to section 485-b of the Real Property Tax Law, entitled. Business Investment Exemption. The question is whether the exemption authorized under this section would apply to leased facilities.

Section 485-b authorizes a partial exemption from real property taxation where there has been an investment in certain real property used for commercial, business or industrial activity. Subdivision 1 of section 485-b provides, “Real property constructed, altered, installed or improved subsequent to the first day of July, nineteen hundred seventy-six for the purpose of commercial, business or industrial activity shall be exempt from taxation, special ad valorem levies and service charges to the extent hereinafter provided.” Subdivision 3 reads, in part, “Such exemption shall be granted only upon application by the owner of such real property on a form prescribed by the state board.”

There is no requirement that an owner-applicant of otherwise qualified property must himself use or occupy the property for its intended purpose. Rather, there is nothing in the law to preclude a owner-lessor from applying for a business investment real property tax exemption on property owned by him and used for the purpose of commercial, business or industrial activity as provided in section 485-b by a lessee. Accordingly, it is the opinion of this office that real property constructed, altered or improved and leased for the purpose of commercial, business or industrial activity, where such real property meets the remaining requirements of section 485-b, may qualify for the partial real property tax exemption authorized thereunder.

October 19, 1976

Updated: