Re: Purchase by a Non-profit corporation

Craig:
 
Unfortunately, only transfers between religious organizations of property not used for commercial purposes are excluded from the realty transfer tax. Otherwise, a purchase by a non-profit corporation such as one exempt from income tax under section 501(c)(3) of the Internal Revenue Code is taxable. 72 P.S. § 8102-C.3(17); 61 Pa. Code §§ 91.161 and 91.193(b)(17).
 
And again, I have bad news to report with respect to the prorations. If a nonprofit organization purchases a taxable property, the property does not automatically become exempt on the day of transfer. The nonprofit organization must establish to the satisfaction of the Montgomery County Board of Assessment Appeals that it is an "Institution of Purely Public Charity" and the property is used for exempt purposes. That exemption takes effect not earlier than for the next assessed taxes after the date the application for exemption was filed. For that reason, it does not appear your client will be getting any relief from the real estate tax prorations. See Bert M. Goodman, Assessment Law & Procedure in Pennsylvania 444-446 (PBI 2005). If your client already has a Pennsylvania Sales Tax Exemption assigned by the Pennsylvania Department of Revenue, there is a statutory presumption under the Real Estate Tax Assessment Laws that it is entitled to a real estate tax exemption if it its annual revenues are below $10,000,000.00 as shown on its IRS Form 990. Pa. Constitution, 1 Pa.C.S. § 1928(b)(5); Pennsylvania General County Assessment Law, 72 P.S. § 5020-204(a)(9); Institutions of Purely Public Charity Act, 10 P.S. §§ 371, et seq.; and the Dept. of Revenue Sales Tax Regulation, 61 Pa. Code § 32.2.

________________________________

From: realproperty-bounce_at_list.pabar.org [mailto:realproperty-bounce_at_list.pabar.org] On Behalf Of Craig Fox
Sent: Friday, November 10, 2006 4:51 PM
To: realproperty_at_list.pabar.org
Subject: [realproperty] Purchase by a Non-profit corporation

Any exemption for transfer tax imposed when a non profit corporation purchases a property?

Also, how do you deal with the property taxes (exemption) both at closing (prorations) and after closing (so they do not have to pay them)?

Thanks for any input.

Craig H. Fox
Fox and Fox Attorneys at Law
706 One Montgomery Plaza
Airy and Swede Streets
Norristown, PA 19401
610-275-7990 Phone
610-275-2866 Fax
cfox_at_foxandfoxlaw.com <BLOCKED::mailto:cfox_at_foxandfoxlaw.com>
www.foxandfoxlaw.com <BLOCKED::http://www.foxandfoxlaw.com/>

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Received on Fri Nov 10 2006 - 14:36:19 PST