Property Tax Exemption for Sale

Name: McKirdy & Riskin, P.A.
Address: 136 South Street, Morristown, NJ, 07850
Telephone: 973-539-8900

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by: Anthony F. Della Pelle

12 Oct 2011

In a recent opinion, the New Jersey Tax Court addressed the issue of the sale of a tax exempt property from one nonprofit entity to another nonprofit entity. The transfer of ownership occurred in July 2009. While the City of Newark agreed that under the new owner, the property qualified for a tax exemption in 2010, the City denied the exemption for the remainder of 2009. In doing so, the City relied on a provision of the tax exemption statute, N.J.S.A. 54:4-3.6, which it interpreted to require the purchaser to own other exempt property. The court disagreed with the City’s interpretation and found that the cited section of the statute, N.J.S.A. 54:4-3.6b, recognizes the continuation of a property tax exemption on the transfer of property from one qualified tax-exempt owner to another without requiring that the purchaser own other exempt property at the time of the acquisition of the new property. The court held that the statute is intended to permit the exemption to continue uninterrupted when the transfer among tax-exempt entities occurs after October 1st of the pretax year, provided that the purchaser has met all other requirements for exemption. A copy of the Tax Court’s opinion is available here.