What are the Requirements for Property Tax Exemption in Arizona for Religious Organizations and Churches?

By June 3, 2020 Church, Real Estate
What are the Requirements for Property Tax Exemption in Arizona for Religious Organizations and Churches?

There are some forms of real property that are exempted from taxation in Arizona. This includes property owned by churches and religious organizations. But not all such property will necessarily be exempted—it has to meet certain requirements.

The exceptions to the Arizona real property property taxation regime are found in the Arizona Constitution, Article IX, sections 2 through 2.3; and in Arizona Revised Statutes (ARS) sections 42-11101 through 42-11133. The provision that applies to churches is ARS 42-11109. According to this statute, in order to qualify for an exemption to property taxation, a property or building must be “used or held primarily for religious worship”. So long as the property meets this qualification, all land, improvements to the land, furniture and equipment are considered non-taxable—but it must also be the case that “the property is not used or held for profit.”

In order to officially qualify for this exemption, the church must file an affidavit in accordance with ARS 42-11152. This provision requires the petitioner for exemption to, when initially filing for exemption, appear before the county assessor to affirm their eligibility—and in years following, to do the same either before the county assessor or a notary public. This requires the petitioner to answer questions on an eligibility form. The affidavit must be filed between the first of January and the last working day of February every year the religious organization is claiming an exemption. It is thus very important for religious organizations to ensure that they stay up to date on filing their affidavit of exemption with their county assessor.

Should the organization fail to file the affidavit in time, the code requires the county treasurer to refund the taxes paid so long as a claim for refund is filed within a year from the date when the taxes were paid.

There are other exceptions to the taxation law that might apply to non-worship locations for religious organizations—but these will fall under more general provisions applying to non-profit organizations organized for charitable causes, such as aiding indigent people.

If you need help determining whether your religious organization’s property is exempt from taxation, we can help. Provident Law’s church and nonprofit attorneys are here to answer questions and to aid in establishing and crafting policies governing religious and nonprofit organizations. We recognize how essential these organizations are to society. We stand ready to counsel and serve by providing broad transactional and general counsel services. Contact us to learn more.