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Assessor's Manual, Volume 4, Exemption Administration

Exemption Administration Manual - Part 2
Private Community Service and Social Organizations

Section 4.05 - RPTL Section 420-a

Nonprofit Organizations (Mandatory Class)

Exemption Code(s): Religious 25110
    Educational 25120
    Charitable 25130
    Hospital 25210
    Moral or mental improvement 25230

Year Originally Enacted:  17991

Related Statutes:    RPTL § §302(5), 490, 494-a

SUMMARY: Real property that (1) is owned by a nonprofit corporation or association organized or conducted exclusively for one or more specific purposes (religious, educational, charitable, hospital, or moral or mental improvement of men, women, or children) and (2) is used exclusively for carrying out one or more of these purposes is wholly exempt from taxation and is exempt, for certain purposes, from special ad valorem levies and special assessments.

  1. ELIGIBILITY REQUIREMENTS:
    1. Ownership Requirements: Owner must be a corporation or association organized or conducted exclusively for one or more of the purposes listed in Property Use Requirements below. No officer, member, or employee of the owning organization may receive or be entitled to receive any pecuniary profit from the operations of the organization, except reasonable compensation for services in carrying out one or more of the purposes of the organization.
       
    2. Property Location Requirements: None.
       
    3. Property Use Requirements: Property must be used exclusively for one or more of the following purposes:

      a.   religious
      b.   educational
      c.   charitable
      d.   hospital
      e.   moral or mental improvement of men, women, or children

      Lease or Use of Property for Other Purposes: If any portion of the property is leased or otherwise used for the above purposes, for civil defense purposes, or for the purposes exempt under certain other statutes, the exemption still applies. These statutes are:

      1. RPTL §406 (municipal corporations)
      2. RPTL §408 (school district or BOCES)
      3. RPTL §416 (United Nations)
      4. RPTL §420-b (nonprofit organization - permissive class)
      5. RPTL §422 (not-for-profit housing company)
      6. RPTL §424 (institute of arts and sciences)
      7. RPTL §426 (opera house)
      8. RPTL §428 (fraternal organization)
      9. RPTL §430 (interdenominational center)
      10. RPTL §450 (agricultural society)

      However, if the payments made for the privilege of such use exceed the carrying, maintenance, and depreciation charges of the portion of the property used, that portion is taxable for all purposes.

      If any portion of the property is leased or otherwise used for any other purpose, that portion is wholly taxable except as provided below.

      Unimproved, Unused Property: Unimproved and unused property from which no revenue is derived is exempt if (1) the property is unused because of the absence of suitable buildings or other improvements, provided that the construction of such improvements is contemplated in good faith or (2) the property is held by the owner on the condition that title to the property will revert to the previous owner if a building not intended or suitable for one or more of the exempt purposes specified in RPTL §420-a is erected.

      Hospital Purposes: Property owned and actually used for hospital purposes by a free public hospital that depends for support on voluntary charity is exempt even if a portion of the property is leased or otherwise used for income-producing purposes, provided that such income is necessary for and is actually applied to the maintenance and support of that hospital.

      Library Purposes: Property owned outside a city by a free public library or held in trust by an educational corporation for free public library purposes is exempt even if a portion of the property is leased or otherwise used for income-producing purposes, provided that such income is necessary for and is actually applied to the maintenance and support of that library.

      START-UP NY:  Property located in tax-free areas that have been approved pursuant to Article 21 of the Economic Development Law and owned by a private educational institution exempt under RPTL §420-a as of June 1, 2013 remains exempt if used for purposes of the START-UP NY program.

      Special-Charter Corporations Unable to Sell Property: This exception applies to property that (1) had been owned for more than 100 years as of 1/1/83 by a corporation organized exclusively for the purposes exempt under RPTL §420-a and (2) was acquired under a grant or devise and a special charter from the New York State Legislature subject to conditions that may restrict the corporation's power to sell the property. Such property is exempt if (1) it is used exclusively for educational purposes, (2) it is leased for these purposes by an educational corporation whose own property would be exempt from taxation, (3) the lease is for a term of not less than 25 years, and (4) the lease (in effect as of 1/1/83) requires the lessee to pay all taxes levied against the property. This type of property is entitled to exemption even if the rental paid by the lessee exceeds the carrying, maintenance, and depreciation charges of the property.

      Certain Property Used for Educational Purposes: Exemption may be granted to property (a) which was exempt on January 1, 1990 because of its ownership and use by an educational organization, (b) the title of which was conveyed to a governmental entity prior to June 30, 1991, (c) which, as a condition of conveyance, is leased, for a term or terms exceeding 100 years, to an educational corporation whose property is exempt when it is used for educational purposes, and (d) which continues to be used exclusively for educational purposes subject to the same conditions as property owned by educational organizations.

      Stadiums: A stadium that (1) is owned by a corporation organized exclusively for educational purposes and (2) was constructed wholly or substantially with state funds is exempt even if it is used by the state, by a municipal corporation for a public use, or by or for a not-for-profit organization.2

    4. Certification by State or Local Government:  None required.
       
    5. Required Construction Start Date or Other Time Requirement:  None, except in the case of certain special-charter corporations and certain property used for educational purposes (see Property Use Requirements above).
       
  2. LOCAL OPTION: No.
     
  3. LIMITATION ON EXEMPTION:
      General
    Municipal
    Taxes
    School
    District
    Taxes
    Special
    Ad Valorem
    Levies
    Special
    Assessments
    1. Amount No
    limit
    No
    limit
    No
    limit
    No
    limit
    2. Duration No
    limit
    No
    limit
    No
    limit
    No
    limit
    3. Taxing Jurisdiction
    a. County or County
    Special Districts
    Ex NA L L
    b. City Ex NA NA Tax
    c. Town or Town
    Special District
    Ex NA L L
    d. Village Ex NA NA Tax
    e. School District NA Ex NA NA
      Ex-Exempt Tax-Taxable NA-Not Applicable
      L - Liable only for (1) county and town charges for capital costs of sewer systems, water supply systems, waterways and drainage improvements, and streets and highways, plus (2) special assessments for indebtedness contracted before 7/1/53.

     
  4. PAYMENTS IN LIEU OF TAXES: None required.
     
  5. CALCULATION OF EXEMPTION:
     
    1. General Municipal and School District Taxes: 100% of assessed value.
       
    2. Special Ad Valorem Levies and Special Assessments: 100% of assessed value or other basis of assessment

      The exemption applies to all levies and assessments imposed by counties, county special districts, towns, and town special districts except (1) charges levied to pay for the capital costs of sewer systems, water supply systems, waterways and drainage improvements, and streets and highways, and (2) special assessments for indebtedness contracted before 7/1/53. The exemption does not apply to special assessments imposed by cities or villages.

  6. CODING OF EXEMPTION ON ASSESSMENT ROLL:
    Code Description of Alternative Codes Possible
    25110 Religious organization
    25120 Educational organization
    25130 Charitable organization
    25210 Hospital organization
    25230 Moral or mental improvement organization

    Assessment Roll Section(s): Exempt (RPS Section 8).

    NOTE: These codes should not be used to identify property owned by nonprofit organizations that is exempt under RPTL §420-b or RPTL §462 (clergy residence) or to identify property that is exempt under any of the statutes listed under Similar Exemptions below. For coding of such property, see the Exemption Profile for the statute that applies.

  7. FILING REQUIREMENTS (Owner or Occupant of Property):

    The owner must file either (a) a properly completed application form prescribed by the Office of Real Property Tax Services (ORPTS) or (b) any comparable application form. If neither type of form is filed, the assessor may nevertheless grant the exemption provided he or she personally inspects the property and certifies in writing that it satisfies all of the requirements for exemption. If the property is not granted exemption, the owner may seek judicial review pursuant to Article 7 of the Real Property Tax Law or Article 78 of the Civil Practice Law and Rules.

    The application forms prescribed by ORPTS are as follows:

    1.  Form(s) - Initial Application:

    Number (Outside NYC) Number (NYC) Title or Subject
    RP-420-a-Org See NYC Department
    of Finance website
    Organization purpose
    Schedule A,
    RP-420-a/b-Org
    (only if required)
    N/A Supplemental information
    on organization purpose

    RP-420-a/b-Use See NYC Department
    of Finance website
    Property use
    or, instead of above forms:
    RP-420-a/b-Vlg N/A Application in villages
    using town or county
    assessment roll per
    RPTL §1402 (2)

         
    2. Form(s) - - Renewal Application (Annual):
     
    Number (Outside NYC) Number (NYC) Title or Subject
    RP-420-a/b-Rnw-I See NYC Department
    of Finance website
    Organization purpose
    Schedule A,
    RP-420-a/b Rnw-I
    (only if required)
    N/A Supplemental information
    on organization purpose
    RP-420-a/b-Rnw-II See NYC Department
    of Finance website
    Property use
    or, instead of above forms:
    RP-420-a/b-Vlg N/A Application in villages
    using town or county
    assessment roll per
    RPTL §1402(2)

    See sample forms and assessor instruction booklets following Exemption Profile.

  8. REPORTING REQUIREMENTS (Assessor): None.
     
  9. SIMILAR EXEMPTIONS:
     
    Subject Statute
    Agricultural societies RPTL §450
    Berkshire Farm Center for Youth Soc Serv L §472-p
    Cemeteries RPTL §446
    City University Construction Fund (NYC) Ed L §6282
    Clergy RPTL §460
    Clergy - property held in trust for
    benefit of church members
    RPTL §436
    Clergy residence owned by religious corporation RPTL §462
    Cultural Resources Trust, NYC Art-Cult L §21
    Cultural Resources Trust, NYS Art-Cult L §20
    Dental expense indemnity corporations RPTL §486 & Ins L §4310(j)
    Educational Construction Fund, NYC Ed L §468
    Educational Construction Fund, Yonkers Ed L §492
    Facilities Development Corporation McK U Con L §4413
    Health and Hospitals Corporation, NYC McK U Con L §7400
    Health maintenance organizations RPTL §486-a
    Higher Education Services Corporation, NYS Ed L §657
    Hospital property held in trust or for benefit of city RPTL §438
    Hospital service corporations RPTL §486 & Ins L §4310(j)
    Infant homes RPTL §440
    Institutes of arts and sciences (NYC) RPTL §424
    Interdenominational centers RPTL §430
    Medical Care Facilities Finance Agency, NYS McK U Con L §7421
    Medical expense indemnity corporations RPTL §486 & Ins L §4310(j)
    Music academies RPTL §434
    Nonprofit organizations (permissive class) RPTL §420-b
    Not-for-profit housing companies RPTL §422
    Nursing homes - limited profit Pub Hel L §2864
    Nursing homes - nonprofit RPTL §422
    Opera houses RPTL §426
    Performing arts buildings RPTL §427
    Special Legislative Acts - prior to 1912
    Theatrical corporations RPTL §432

    Exemption Application Forms:

    RP-420-a-Org
    Schedule A (RP-420-a/b-Org)
    RP-420-a/b-Use
    RP-420-a/b-Rnw-I
    Schedule A (RP-420-a/b-Rnw-I)
    RP-420-a/b-Rnw-II
    RP-420-a/b-Vlg

    Instructions To Assessors: Application for Real Property Tax Exemption for Nonprofit Organizations

    Instructions to Assessors: Renewal Application for Real Property Tax Exemption for Nonprofit Organizations

11799 - Law applied to religious, educational, and charitable purposes only.
1893 - Provision added for moral or mental improvement purposes.
1896 - Provision added for hospital purposes.

2For a definition of "public use" see the Exemption Profile for RPTL §406(1) in section 4.03 of this volume.

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