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.

9 thoughts on “California Property Tax Welfare Exemption

  1. Sheila

    Will a non-profit Foundation (that supports a hospital) need to file for Welfare Exemption in CA?

    • Gene Takagi

      If the foundation is looking for property tax exemption and assuming it qualifies, it would likely apply for exempt status under the welfare exemption. The foundation will want to confer with knowledgeable counsel about whether its purposes and activities on any property it owns qualify.

  2. del norte county

    if a hospital has welfare exempt status, does that include a reference laboratory who receive patients other than just “hospital” patients where the hospital profits off of the outside patients? AND, what paper work must the hospital file with the county assessors office annually?

    • Gene Takagi

      We’re unable to address specific facts and circumstances, but the following information in the BOE publication on the Property Tax Welfare Exemption may be helpful to some:

      What is meant by “hospital” purpose?
      Hospital, as it is used for the Welfare Exemption, has been defined by the California Supreme Court in the following manner:
      A hospital is primarily a service organization. It serves three groups: the patients, its doctors, and the public. It furnishes a place where the patient, whether poor or rich, can be treated under ideal condi- tions. It makes available room, special diet, X-ray, laboratory, surgery, and a multitude of other services and equipment now available through the advances of medical science. Essential to the administration of these techniques is the corps of highly trained nurses and student nurses who is on duty twenty-four hours per day. In the large hospitals there are the interns and residents whose presences make it possible for the hospital to do a better job. In addition, the hospital . . . must have administration to see that its services function properly and are coordinated, and that patients are received and cared for regardless of the hour or the patient’s condition. Nothing can be left to chance because a slip may mean a life or many lives. These facilities also stand ready to serve the community in times of epidemic or disaster.
      Property may also be considered exclusively used for hospital purposes if it is owned and operated by a qualifying nonprofit organization and if it is exclusively used to provide support services for the hospital. Some examples of support services to hospitals include purchasing, food services, laundry, collections, or waste disposal.

      The BOE publication also directs the reader to the appropriate forms to file with the county (see Exhibit B).

  3. Noel

    our school district leased out a portion of one of its campuses to a California non-profit corporation.
    They plan to use the facility to conduct preschool programs for about 100 children from low-inome families. The program includes feeding, care, and other activities to prepare the children for kindergarten. The lessee does not charge fees from the families but is funded by the CA Dept of Education in conjunction w the school district.
    is the lessee or the school district liable to pay property taxes for the leased area? The lessee pays the school district $1 per year.
    thanks in advance.

  4. Fadi, if the school is in California, please read Publication 149 for all the permutations of how the exemptions may apply.

  5. does this apply to religious schools as well ?

  6. The welfare exemption discussed would not apply to individuals. Is your landlord a nonprofit organization operating exclusively for a qualifying purpose?

  7. love83

    so i received a letter from my landlord/ tha 1st letter i’ve ever received from a landlord/ requesting me to verify my family size and income regarding this type of exemption. at 1st i thought they would be figuring my income to see if i would have to pay into any property tax/but i guess i was reading it wrong. I am correct in believing that a renter is not liable for any property tax right??

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