Friday, July 25, 2014

Board Finds Building Purchased to House Preservation Society Exempt Despite the Fact Petitioner Had Not Moved Into the Building as of the Assessment Date

Excerpts of the Board's Determination follow:

15. Landmarks claims an exemption under two statutes: Ind. Code I.C. § 6-1.1-10-16(a) and Ind. Code § 6-1.1-10-18(a). The first exempts all or part of a building that is owned, occupied, and predominantly used for educational, literary, scientific, religious, or charitable purposes. I.C. § 6-1.1-10-16(a); I.C. § 6-1.1-10-36.3. That exemption extends to the land on which the building is situated. I.C. § 6-1.1-10-16(c). The second statute exempts tangible property “if it is owned by an Indiana not-for-profit corporation which is organized and operated for the primary purpose of coordinating, promoting, encouraging, housing, or providing financial support to activities in the field of fine arts.” I.C. § 6-1.1-10-18(a). The field of fine arts includes architecture. See I.C. 6-1.1-10-18(b).

16. Exemption statutes are strictly construed against the person claiming the exemption. See Sangralea Boys Fund, Inc. v. State Bd. of Tax Comm’rs, 686 N.E.2d 954, 956 (Ind. Tax Ct. 1997). But they are not to be construed so narrowly as to frustrate the legislature’s purpose. Id.; see also, Trinity Episcopal Church v. State Bd. of Tax Comm’rs, 694 N.E.2d 816, 818 (Ind. Tax Ct. 1998).

17. Landmarks was organized for exempt purposes—to promote architecturally significant sites and structures. And it bought the subject property to further those purposes. The Assessor does not really dispute those facts. Instead, she argues that because Landmarks had not yet moved its offices to the property on the assessment date, the property was not occupied and used for exempt purposes as required by Ind. Code § 6-1.1-10-16(a). 
18. The Assessor apparently ignores Ind. Code § 6-1.1-10-18, which unlike Ind. Code § 6-1.1-10-16(a), says nothing about occupancy. Regardless, the fact that Landmarks had not finished moving its offices to the subject property as of the assessment date, by itself, would not defeat Landmarks' exemption claim.

19. In Trinity Episcopal Church, the taxpayer claimed an exemption under Ind. Code § 6-1.1-10-16(a) for a building that it was renovating to lease for use as a community mental health center. The State Board of Tax Commissioners denied the exemption because it determined that the building was vacant on the assessment date. Trinity Episcopal Church, 694 N.E.2d at 817.

20. The Indiana Tax Court reversed, holding that a taxpayer’s actions in preparing a building to be used for exempt purposes in the future may qualify the building for property tax exemption under Ind. Code § 6-1.1-10-16(a). Id. at 818. But as the court explained, ownership alone does not suffice; the intent to use a property for an exempt purpose must be “more than a mere dream.” Id. (quoting Foursquare Tabernacle Church of God in Christ v. Sate Bd. of Tax Comm’rs, 550 N.E.2d 850, 854 (Ind. Tax Ct. 1990)). The intent of the taxpayer in Trinity Episcopal Church was not a mere dream; instead, it had taken concrete steps at great expense to prepare its building for use as a mental health center. The building qualified for an exemption because, as of the assessment date, the taxpayer held the building with the intent to use it for exempt purposes in the future. Id. at 818-19.

21. Like the taxpayer in Trinity Episcopal Church, Landmarks bought the subject property intending to use it for an exempt purpose and took concrete steps toward that use, even if it did not fully occupy the property on March 1. Landmarks transferred the building’s utilities to its name and began moving files to the building immediately after buying it. Landmarks similarly arranged to have the building painted and plastered before attempting to move furniture and equipment from its existing office.

22. The Board therefore finds that the subject property was exempt for the March 1, 2011 assessment date.