It is commonly known that churches are exempt from property taxes. However, ownership by a religious organization is not enough to qualify for a tax exemption; the law requires that the property also be used and occupied directly for religious purposes in order to qualify for the tax exemption. Here, upholding the City’s denial of the exemption, the Court held that a vacant church being used to store religious artifacts did not qualify for the religious tax exemption.
The properties in question are two churches that had been closed by the religious organization during a reorganization process to address budgetary and staffing concerns. The parishioners became members of other churches, and the church continued to maintain the buildings and to use them to house items of religious significance such as marble altars, marble pulpits, a cross, stained glass windows, organs, stations of the cross, statutes and pews. Both properties were put up for sale. During this period, the church sought a property tax exemption arguing that, although the churches were not being actively used for services, they were being used for religious purposes in that they were being used to store religious items, and one was being used by a “Neighborhood Watch” group. The Board of Tax and Land Appeals agreed and overturned the City’s denial of a tax exemption.
RSA 72:23, III provides that the land upon which the exemption is sought must be “owned, used and occupied directly for religious training or for other religious purposes by any regularly recognized and constituted denomination….” There was no dispute that the properties subject to this appeal were owned by a regularly recognized and constituted denomination. The dispute centered on whether or not the properties were “used and occupied” for religious purposes when the property was used to store religious items. The church argued that many organizations, including hospitals, have items that are not in constant use, and that temporary disuse of certain items at a given property should not result in denial of a tax exemption application. Further, it claimed that the storage of the religious items constituted using the property for religious purposes in that they were preserving and protecting the religious objects of the church. The Court pointed out that in this case, it was not just disuse of a few items within the building, but instead the disuse of the entire building and its contents. Moreover, the mere storage of religious objects in a deconsecrated church, on a temporary basis, does not rise to the level of using or occupying the space for “religious purposes.” The Court also found significant the fact that the parishioners of both churches were conducting their worship and church-related activities at other churches. Thus, the Court concluded that no one was occupying either premises for religious purposes.
However, the Court did not completely foreclose the possibility that a church no longer used for religious services might remain eligible for a religious property exemption. In reviewing case law of other jurisdictions, the Court pointed out that churches that have been closed and used for the storage of religious artifacts have nonetheless qualified for a religious tax exemption when they are also used for activities such as deanery meetings, a youth basketball program, bake sales, flea markets, choir practice and as a site for accumulating clothing and materials before they were shipped to missionary sites. In contrast, in the present case, the Court found that the use as storage, together with the use by a Neighborhood Watch group, which had no connection with any religious activity, was not enough for a religious tax exemption pursuant to RSA 72:23, III because those uses were not religious uses as required by the statute.