How New York's property tax waivers for nonprofits work

If you are a board member of a nonprofit organization in New York, you might be trying to determine the property tax requirements. New York, like many other states, does offer waiver of property taxes under certain circumstances.

These include:

• You must own the property - the nonprofit organization must hold the deed to the property in the name of the nonprofit organization
• Purpose of Nonprofit - the nonprofit organization must be one of several “charitable” categories in New York. These include cemeteries (Section 446 in NY); parsonages (Section 442), charitable (Section 420(a)) or benevolent (Section 420(b)).
• Subleasing - if a New York nonprofit property is subleased to any organization which does not fall under the “charitable” categories as defined in New York, that portion is not exempt from property tax
• Subleasing II - if a New York nonprofit organization sub-leases a portion of the property to another entity which does fall into the “charitable” categories, you must supply all documentation supporting such claim
• Unimproved property - if a New York nonprofit organization can prove the purposes of the unimproved property (defined as one in the stages of construction) a property tax waiver will be considered.

There is special paperwork which is required to be filed with the New York City Department of Finance that would allow a nonprofit organization to obtain a property tax waiver. The paperwork must
be filed with the property tax exemption unit by January 5 of the year immediately following acquisition unless it was transferred from one nonprofit organization to another.
The documentation that must be provided is extensive. These documents include:

• photo-copies of the deed
• copies of Articles of Incorporation
• copies of the nonprofit's Constitution or By-Laws
• copy of tax filings (when required by the IRS) and a copy of the IRS ruling showing the tax-exempt status of the organization

In those cases where the determination has not been formalized with the Internal Revenue Service, a copy of the request for this exemption may be included.
In the case where one New York nonprofit organization is leasing to another nonprofit organization any portion of the property, the same documents along with a copy of the lease must also be attached to the six page application for waiver of property taxes. Should the property have past due property taxes that might be owed, if an exemption is granted the prior year’s taxes will also be waived. This does not apply to taxes that are more than one year old.

If you are a board member of a nonprofit organization in New York, you should carefully review all of the information available regarding New York nonprofit property tax waivers. It could significantly reduce your tax liability.