California Code of Regulations › Title 18 - Public Revenues › Division 1 - State Board of Equalization-Property Tax (California Department of Tax and Fee Administration - Timber Yield Tax, See Chapter 11) › Chapter 2 - Assessment › Article 3 - Exemptions and Immunities › Section 137 - Application of the Welfare Exemption to Property Used for Housing

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Housing and related facilities owned and
				  used by community chests, funds, foundations or corporations organized and
				  operated for religious, hospital, scientific or charitable purposes is eligible
				  for the welfare exemption from property taxation as provided in Revenue and
				  Taxation Code section
				  214.
				  A single uniform statewide standard shall be used to determine whether the
				  welfare exemption applies to housing and related facilities owned and used by
				  qualified organizations. The standard is whether the use of the property by the
				  organization for housing and related facilities is a use that is incidental to
				  and reasonably necessary for the accomplishment of the exempt purposes of the
				  organization. For purposes of applying the uniform statewide standard, the
				  phrase "Use of property that is incidental to and reasonably necessary for the
				  accomplishment of the exempt purposes of the organization" includes the use of
				  property that is institutionally necessary for the operation of the
				  organization as provided in subdivision (i) of section
				  214
				  of the Revenue and Taxation Code.
(b) For purposes of determining whether
				  property used for housing and related facilities is eligible for the welfare
				  exemption, the terms "incidental to and reasonably necessary for" and
				  "institutionally necessary" are identical and interchangeable; the term
				  "institutionally necessary" means and includes "incidental to and reasonably
				  necessary for" and vice versa. No distinctions in application of the welfare
				  exemption to housing and related facilities shall be based on any difference or
				  divergence between the terms.
(c)
				  For purposes of determining eligibility for the welfare exemption, it is the
				  use of the housing and related facilities by the organization owning the
				  property that is to be considered, not the use by the occupants. If the
				  organization's use of the property is incidental to and reasonably necessary
				  for the accomplishment of the organization's exempt purposes, the property is
				  eligible for exemption. The occupant's use for personal or residential purposes
				  is secondary to the organization's primary exempt purpose and shall not
				  disqualify the property from exemption either in whole or in part.
(d) The location of the property in relation
				  to other property owned and used by the exempt organization is irrelevant to
				  the application of the exemption. It is the use of the property by the
				  organization which is the determining factor. The fact that the housing is
				  located on property in a remote area may be considered in determining whether
				  the housing is incidental to and reasonably necessary for the operation of the
				  organization.
(e) Examples: The
				  following examples illustrate the application of the welfare exemption to
				  housing and related facilities
Example No. 1
The two-story building with seven completely-furnished
					 apartments is used exclusively to provide temporary low-cost housing to
					 missionaries, clergy, other religious workers and their families on furlough
					 status while in the United States. The articles of incorporation of the
					 nonprofit religious corporation which owns and operates the property provide
					 that its purpose is to provide housing for missionaries, clergymen, other
					 religious workers and their families who work in establishing and furthering
					 its religious purposes throughout the world. This housing is exempt as a
					 facility incidental to and reasonably necessary for the accomplishment of the
					 church's religious and charitable purposes.
Example No. 2
The property of a private school is used to provide board
					 and housing to students. Although most of the school's students were day
					 students, some students relied upon the school for board and lodging. These
					 services provided by the school are reasonably related to the exempt
					 educational activity, and are an exempt use of the property within the school's
					 educational purpose.
Example No. 3
Property owned by a nonprofit corporation is used for
					 housing and related facilities for persons who assemble two weeks each year for
					 purposes of religious instruction and worship. The residential facilities are
					 exempt as within the organization's religious purpose. Housing for caretakers
					 or maintenance workers required to reside at the religious conclave facility is
					 exempt as institutionally necessary.
Example No. 4
A nonprofit religious organization owns housing which it
					 provides to its ministers and their families. Organizational documents require
					 the church to provide housing as part of a system that allows the organization
					 flexibility in assigning the clergy, aids in recruiting and keeping the clergy
					 and provides the clergy with privacy and respite. The property also is used
					 regularly for church functions such as youth meetings and organizational
					 committee meetings. The church's use of its property to provide housing for its
					 clergy is exempt as reasonably necessary for the furtherance of its religious
					 purpose.
Example No. 5
The primary missionary activity of a nonprofit religious
					 organization is to publish and disseminate its religious literature to the
					 general public. The organization owns a complex consisting of a temple and six
					 apartment buildings that provide work areas for about 250 devotees, about
					 one-half of whom are involved in the publishing and distribution of the
					 organization's religious books and magazines. The work areas are frequently
					 used at night as sleeping areas since most of the devotees live in the rooms in
					 which they work. The devotees follow a seven-hour daily regimen of communal and
					 individual daily prayers, meditations, chanting, and attendance at temple
					 services and observe a strict diet which necessitates living in the temple
					 complex. Property used for housing the devotees in the temple complex is exempt
					 as reasonably necessary for the fulfillment of the organization's religious
					 objectives.
1. New
					 section filed 12-13-99; operative 12-31-99 pursuant to Government Code section
					 11343.4(d)
					 (Register 99, No. 51).
Note: Authority cited: Section
						15606(c),
						Government Code. Reference: Sections
						214,
						214.01,
						214.1., 214.2, 254, 254.5 and 255,
						Revenue and Taxation Code; and Article XIII, Sections (4)b and (5), California
						Constitution.