Section 52 Charitable Property

• Library: Tax Law 2009

The charitable exemption covers property not held for private or corporate profit and used exclusively for purposes purely charitable. The following three guidelines determine whether property is dedicated to charitable use:

1. The property must be used for charitable purposes

2. The property must be owned and operated on a not-for-profit basis

3. The property must be used to benefit an indefinite number of people and society generally

Franciscan Tertiary Province of Mo., Inc. v. State Tax Comm’n of Mo., 566 S.W.2d 213 (Mo. banc 1978).

The first guideline focuses on the use of the property and not the nature of the owner. Thus, even though the taxpayer’s business is not-for-profit,the headquarters used to promote the business interests of its members may be taxable. Home Builders Ass’n
of Greater St. Louis v. St. Louis County Bd. of Equalization,
803 S.W.2d 636 (Mo. App. E.D. 1991). Denying services to those who cannot afford them also disqualifies the property from the exemption. Cape Retirement Cmty., Inc. v. Kuehle, 798 S.W.2d 201 (Mo. App. E.D. 1990). But a charitable institution does not have to prove that a certain number or percentage of indigent patients are served. Callaway Cmty. Hosp. Ass’n v. Craighead, 759 S.W.2d 253, 256 (Mo. App. W.D. 1988). A use may be charitable even if its beneficiaries are not destitute. Affiliated Med. Transp., Inc. v. State Tax Comm’n of Mo., 755 S.W.2d 646, 650 (Mo. App. E.D. 1988) (“[C]harity is not limited solely to the relief of the destitute.”).

Under the second guideline, any profit that is earned must be incidental and not a primary goal and must also be devoted to the charitable purposes. Sunday Sch. Bd. of S. Baptist Convention v. Mitchell, 658 S.W.2d 1 (Mo. banc 1983). There must be a significant nexus between the use of the property and the use that...