Property Tax Exemptions for Religious Organizations

"Thou Shalt Pay..... Unless?"

This information, produced by the Santa Cruz County Assessor explains how religious organizations may avoid paying property taxes.

What property qualifies for this kind of exemption?

There are three exemptions which may be claimed on church property:

  • The Church Exemption which is applied to church property used exclusively for worship. The property may be owned, leased, or rented by the religious organization.
  • The Religious Exemption which includes the Church Exemption but is expanded to cover preschool, nursery school, or parochial school activities. The property must be owned by the religious organization.
  • The Welfare Exemption, which may be claimed on property owned by a religious organization and used exclusively for one or more of the above activities and/or any other religious activities. The property must be owned by the religious organization.

What does "religion" mean? What about "worship"?

The content of a religious belief is not a matter of governmental concern and should not be subject to an inquiry concerning its validity. Having said that, we (the County Assessor) are nevertheless required to administer the exemption. The courts have defined "religion" by enumerating the elements of a religion to simply include:

  1. a belief, not necessarily referring to supernatural powers,
  2. a cult involving a gregarious association openly expressing the belief,
  3. a system of moral practice directly resulting from adherence to the belief, and
  4. an organization within the cult designed to observe the tenets of the belief.

"Worship" has been defined by the courts as the formal observance of the religious tenets or belief.

How and when do I file for one of these exemptions?

Church, religious and welfare exemptions (forms 262-AH, 267-S and 267) are obtained from the County Assessor. They must be filed by February 15 each year for the following fiscal year (July 1 - June 30). If they are filed after February 15 but prior to January 1 of the following year, 90% of the exemption is available.

Does all property owned by religious organizations get exempted? What kind of use doesn't qualify?

Contrary to a common belief, not all activities engaged in by religious organizations qualify for property tax exemption. Some non-qualifying uses are:

  • Vacant, unused, or excess property
  • New construction or demolition that has not begun as of the January 1 lien date
  • Fundraising - property used primarily for producing income
  • Thrift Stores

If you need claim forms, or have any questions concerning these exemptions, please contact the County Assessor at (831) 454-2002.