WELFARE EXEMPTIONS

In California it is possible to receive 100% real property tax abatement for certain non-profit and nonprofit/ for profit hybrid uses.  The California Legislature has the authority to exempt property that is used exclusively for religious, hospital or charitable purposes and is owned or held in trust by nonprofit organizations operating for those purposes.  This exemption was first adopted by voters as a constitutional amendment on November 7, 1944.  When the Legislature enacted Section 214 of the Revenue and Taxation Code to implement the Constitutional provision, a fourth purpose, scientific, was added to the three mentioned in the Constitution.  Unfortunately the tax abatement does not reduce any Mello Roos or special assessments. 

The welfare exemptions apply to uses such as:

       Schools (not trade schools)

       Low income housing (Section 8 and Section 42)

       Elderly and handicapped housing

       Thrift stores

       Rehabilitation living quarters

       Veterans’ organizations

       Scientific research facilities (must be federally chartered)

       Hospitals

       Religious places of worship

Some of the welfare exemption requirements include:

       Real property that is either 501(c)(3) owned, 501(c)(3) and governmental owned LLCs or has a 501(c)(3) managing general partner of the owning limited partnership

       California Attorney General nonprofit qualification

       California Board of Equalization Organizational Clearance Certificate

       California Board of Equalization Supplemental Clearance Certificate 

       County Supplemental Clearance Certificate

       Annual Certification

The information in this article is intended to be a general description of tax laws and is not advice as to any transactions, nor is this article advice to any person or to any client and should not be relied upon as such.  If you or your client desire to receive specific legal or tax advice on a specific transaction, then please call Caldwell Law at (818) 992-2921.

 

 

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