The Indiana property tax filing season is upon us, with Form 136 exemption applications for the January 1, 2018 assessment date due by April 1st for taxpayers wishing to claim exemptions for real and personal property. Whether an application is due is a fact specific inquiry, depending in part on the property, its use, and the particular exemption claimed. The most common exemption, for example, is that for property owned, occupied and predominantly used for educational, literary, scientific, or charitable purposes under Indiana Code § 6-1.1-10-16. Exemptions are also available for certain property leased to State agencies and Universities, property owned by fraternities and sororities, and property owned by specified organizations like the Boy Scouts of America. Failure to file timely or properly claim the exemption could lead to a waiver.
The Indiana Board of Tax Review in February applied a partial exemption to a building owned by Historic Landmarks Foundation of Indiana, Inc. The Foundation is a non-profit organization with a mission of historic preservation. It educates the public about contemporary rehabilitation and preservation, provides financial support to local organizations, and acquires historic properties that appear threatened. Properties are resold with protective covenants that require the new owners to complete the restorations. The Foundation has bought and sold more than 500 properties since 1968 – including the subject three-story building in downtown Edinburgh.
The Foundation claimed an exemption for the January 1, 2016 assessment date under two statutes: (i) the fine arts exemption under Indiana Code § 6-1.1-10-18 (for property owned by an Indiana not-for-profit corporation that “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,” including architecture, and (ii) the charitable-purpose exemption noted above.
The building did not qualify for the fine arts exemption. The evidence showed that the Foundation may have been organized to preserve and support architecturally significant buildings but it was not operated primarily for that purpose. The Foundation “focused at least as much, if not more, on preserving sites for their historical value as it did on preserving sites for architectural significance.” History and architecture may overlap, but they are not the same the Board reasoned.
But the property was partially exempt under the charitable-purpose exemption. Citing Indiana Tax Court precedent, the Board explained:
[Foundation] had a charitable purpose: preserving the historic character of Edinburgh’s commercial district, at least part of which—the building under appeal—had fallen into disrepair. [Foundation] owned and used the property to further that charitable purpose. It renovated and stabilized the building and attempted to sell the property subject to covenants obligating any buyer to maintain and preserve the building in its historic condition. Similarly, [Foundation] either actually or constructively occupied the property while it was doing those things.
However, the building’s first floor was leased and there was no evidence showing it was occupied by the tenant for an exempt purpose. The property thus qualified for a two-thirds exemption. The Board’s decision (issued February 26, 2018) can be viewed here.
