California Property Tax Welfare Exemption

In March 2008, the California State Board of Equalization published Publication 149 – Property Tax Welfare Exemption.  Here is an excerpt from the Introduction:

The California Legislature has the authority to exempt property (1) used exclusively for religious, hospital, or charitable purposes, and (2) owned or held in trust by nonprofit organizations operating for those purposes.  This exemption is known as the Welfare Exemption ….  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.

The following information is intended as a guide for organizations that wish to file for a property tax exemption through the Welfare Exemption.

Before you dismiss reading the Publication, note the following:

  • 501(c)(3) status does not automatically make an organization exempt from property taxes.
  • Not every 501(c)(3) organization will qualify for the Welfare Exemption.
  • New organizations must have certain "magic language" in their governing documents in order to qualify for the Welfare Exemption (see Exhibit C: Irrevocable Dedication and Dissolution Clauses).
  • An organization seeking exemption for the first time must file a claim for an Organizational Clearance Certificate and, where applicable, a Supplemental Clearance Certificate for Limited Partnership, Low-Income Housing Property – Welfare Exemption, with the Board.
  • Claims for the Welfare Exemption must also be filed annually with the county assessor in which the organization’s property is located or being used.