Must Charities Pay Property Tax on Inherited Real Estate?

For charities and churches alike, property tax exemptions usually only apply to real estate used exclusively to perform the relevant mission.

In the Emmanuel case, the court denied exemption for the disputed property because the church:

• rented much of it to an unrelated business and
• used the rest of it for non-worship purposes.

The outcome in the Emmanuel case would likely be the same in any jurisdiction. The underlying policy is clear. If charities held large portfolios of tax-free real estate, the revenue shortfall for municipalities would be catastrophic.