Nonprofit Guide to Property Tax Assessment

Man at iPad

Nonprofit organizations apply to the Internal Revenue Service to seek 501(c)(3) status. This federal determination allows nonprofits to collect tax-deductible donations and exempts them from corporate income tax liability. If an organization received a federal 501(c)(3) determination letter from the IRS, it is exempt from state corporate income tax liability as well. Nonprofits may also be exempt from property and sales tax in Minnesota. These exemptions are not automatically based on 501(c)(3) determination.

If an organization is applying for exemption for the first time, it must secure the application from and apply to its county assessor (or in some cases, a city assessor). The organization must submit an Application for Property Tax Exemption to the county assessor on or before February 1 of the assessment year.

Once a property is granted exemption, the nonprofit organization must participate in a three-year assessment review. The next reassessment years are 2025, 2028, 2031, and every third year thereafter. Once an organization receives a properly granted exemption, it will remain in effect unless there is a material change in facts.

From 2007-2009, the Minnesota Council of Nonprofits and its members worked for passage of Minnesota legislation to clarify the standards that a 501(c)(3) organization must meet in order to qualify for a property tax exemption, and we currently participate in the Department of Revenue’s Review Board (see Charity Review Board Bulletin). This guide will assist your nonprofit in understanding the law, determining whether or not you think that you qualify for a property tax exemption, and how to prepare your application to assessors and other interested parties.

Toolkit Sections: