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Volume 2 - Opinions of Counsel SBEA No. 95

Opinions of Counsel index

Nonprofit organizations exemption (religious) (church-owned property leased to State) - Real Property Tax Law, § 421:

Real property leased by a church to the New York State Department of Mental Hygiene is not eligible for tax exempt status even though it is to be used for exempt purposes.

Our opinion has been requested as to the taxable status of property owned by the Catholic Church which New York State contemplates renting.

Apparently the property is presently used exclusively by the church for a purpose exempt under the provisions of section 421 of the Real Property Tax Law. Therefore it has been exempt from taxation. The question is whether it would continue to be exempt if rented to the State Department of Mental Hygiene.

Whether the church will retain its exempt status upon rental to the State Department is controlled by section 421 of the Real Property Tax Law. Under the provisions of this section, the property must be used exclusively for an exempt purpose either by the owning corporation or by another corporation enumerated in subdivision 2 of section 421. The only public corporation referred to in subdivision 2 is a school district which owns real property exempt from taxation pursuant to section 406 of the Real Property Tax Law. Thus, neither the State nor any municipal corporation other than a school district is included as a permissible (i.e., exempt) user pursuant to section 421.

In view of the fact that exemption statutes are strictly construed, our conclusion must be that the church will lose its exempt status as to the facility if it is rented to the State Department, even though it is to be used for exempt purposes.

A review of the history of section 421 supports our conclusion. The provisions of subdivision 2 relating to use by corporations other than the owner (including use by a school district) were enacted because the provisions now contained in subdivision 1 had been construed as exempting the real property of only those corporations which themselves were using the property for exempt purposes (see, New York State Legislative Annuals, 1948 at p. 291 and 1953 at p. 309).

January 26, 1973