To Tax or Not to Tax: The Benefit of Real Estate Tax Exemption Is Provided Only to Purely Public Charities for Properties Actually and Regularly Used by the Charity for Charitable Purposes

By: Pamela A. Lee, Esquire

In a recent article, a Montgomery County newspaper reported on a new but previously unrecognized cost to a local YMCA chapter that closed or soon will be closing two of its local facilities: real estate taxes.

In Pennsylvania, our law provides for the “principle that a taxpayer should pay no more or no less than his proportionate share of the cost of government.”  Our Supreme Court has explained that taxes are not penalties but are contributions that all are expected to make to fund the cost of government.

Certain organizations in Pennsylvania—such as purely public charities—may be exempt from real estate tax based upon the traditional premise that they are given a “quid pro quo” for providing services which the government would otherwise have to provide.

However, institutions of purely public charities should be aware that if the “quid pro quo” ceases—for example, when a purely public charity closes its doors and no longer uses its property for charitable purposes—the property will no longer be entitled to the benefit of tax exemption even though the property is still owned by the charitable entity.

According to the article, the YMCA does not currently pay real estate taxes on the two properties; but both will become fully taxable January 1st because when the properties are vacant they are no longer being used to provide YMCA’s charitable services to the public. The article correctly noted that a property’s use provides the exemption and is not determined solely based upon ownership by a charitable organization.

A property owner claiming real estate tax exemption bears the burden of proving that the subject property is “actually and regularly used for purposes of the institution” and is used to “advance the charitable purpose of the institution” under Pennsylvania law.

Similarly, a purely public charity that leases its property to another charitable entity also is not, except under limited circumstances, entitled to the benefit of real estate tax exemption.  Pennsylvania law does not provide real estate exemption unless the entity using and occupying the property is “seized of” the legal or equitable title in the property.

Why the high burden for charitable organizations?  Because taxpayers pay more than their fair share of the cost of government when other property owners pay less than their fair share in real estate taxes.  The law is such that it protects all of our taxpayers, not only those purporting to be purely public charities.

The Law Firm of DiOrio & Sereni, LLP is a full-service law firm in Media, Delaware County, Pennsylvania. We strive to help people, businesses and institutions throughout Southeastern Pennsylvania solve legal problems – and even prevent legal problems before they occur.  To learn more about the full range of our specific practice areas, please visit or contact Pamela A. Lee, Esquire at 610-565-5700 or at [email protected]

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