To receive an exemption for the taxable year, the property must be
owned by the organization prior to the beginning of the
tax year (July 1) for which the exemption is sought. The organization
owning the property prior to the taxable year may apply for the exemption
up to September 1 following the beginning of the taxable year for which
the exemption is sought (see Tax-Property Article 7-104). However, the
granting of the exemption must be based upon actual and exclusive use
tests as described below.
Every applicant seeking either a charitable, educational or religious
exemption pursuant to Section 7-202 and Section 7-204 of the
Tax-Property Article must meet two fundamental requirements. First,
there is an "ownership" test whereby the property on which the exemption
is sought must be owned by the applicant charitable, educational or
religious organization. Segroves v. Supervisor of Assmts., 51 Md.
App. 489, 444 A.2d 1042 (1982). The exception to the titled ownership
requirement involves a 99-year or perpetually renewable lease which,
nevertheless, is the legal equivalent to ownership under Section 6-102 of
the Tax-Property Article.
Second, the property must be "actually used" and "exclusively for" the
exempt purposes. The terms "actually used" and "exclusively for" have been
the subject of a significant amount of judicial review and interpretation.
A religious or charitable organization which begins construction of a new
building structure is entitled to exemption in the current taxable year if
the building permit has been issued as of July 1, and assuming that the
exemption application filing deadline of September 1, has been met.
Montgomery County v. Meany, 34 Md. App. 647, 368 A.2d 1107 (1977).
However, vacant land is not entitled to the exemption despite attempts by
religious and other organizations to establish temporary uses of the
property such as for tent revivals, open prayer services or congregation
picnics and athletic programs. Such temporary uses have been held by the
Maryland courts as failing to meet the legal requirements of "actually
using" the property to the full extent required by the statutorily
specified exempt purposes. Bullis School, Inc. v. Appeal Tax Court,
207 Md. 272, 114 A.2d 41 (1955). See also 66 Op. Att'y Gen. 3 (September
21, 1981). Thus, the earliest stage at which "actual" use can begin is
with the commencement of construction of permanent structures or the
renovation of existing improvements intended to carry out the exempt
purposes. Once an exemption is granted on the basis of the issuance of a
building permit, the applicant organization must make "continual progress"
in the building of the permanent improvements, or the exemption may be
withdrawn at a later date. Meany, supra.
The "exclusively for" language in the statutory "use" test resulted in
a judicial standard for granting exemptions which requires that the
property must be used primarily for only certain specified purposes. For
example, the Court of Appeals held in Supervisor of Assessments v.
Trustees of Bosley Methodist Church Graveyard, 293 Md. 208, 443 A.2d
91 (1982) that caretakers' houses intended to protect churches and
graveyards from vandals and to maintain the building and grounds are not
being used "exclusively for the statutorily stated purpose of public
religious worship" and therefore, are fully
taxable. |