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Property Tax Exempon for
Nonprots: Churches
Churches may be eligible for a property tax exempon if they
conduct certain acvies and are wholly used for church
purposes.
The exempon applies to real and personal property owned
by the church and used exclusively for religious worship and
related church purposes.
A maximum of ve acres of real property is eligible for
exempon. This maximum acreage may include a parsonage,
convent, caretaker’s residence, and parking. Unoccupied land
or undeveloped land included within the ve acres shall not
exceed 1/3 of an acre.
Annual renewals due Mar. 31
To keep your property tax exempon, you are required to submit an annual renewal. The Department of
Revenue (department) sends a noce each year in January, reminding nonprots to renew their exempon
online (dor.wa.gov) prior to the Mar. 31 deadline.
If the department receives your renewal aer Mar. 31, late fees of $10.00 per month will be assessed. Failure
to renew before Nov. 30, will result in the loss of the property tax exempon as of Jan. 1 of the current year.
Please recognize, when a nonprot qualies for a property tax exempon they must connue to meet the
exempon standard(s) that allowed them to receive the tax benet in the rst place. If there is any change
in use or acvity, including the cessaon of use or the sale of property, you must nofy the department to
determine whether the new use is exempt.
Loan and rental
A church may loan or rent their exempt property to nonprot organizaons or schools to conduct qualifying
charitable acvies on a single-use or hourly basis. Any rental income or donaons received from the loan or
rental cannot exceed maintenance and operaon expenses for the poron of the property being loaned or
rented.
If the property, or a poron of the property, is rented or loaned to any other organizaon, for their use
exclusively, it may jeopardize the exempon. For example, if an oce in the building is rented out to a local
therapist on a month to month basis and the therapist is the only one that has access to that oce while they
are renng it, that poron of the property is not eligible for exempon and that poron of the property will be
taxed.
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Examples of qualifying charitable acvies:
• Community club conducng a canned food drive for the local food bank.
• Nonprot school conducng a free or low-cost adult literacy class.
• Community organizaons holding free evening or weekend meengs designed to help individuals
struggling with substance abuse.
Churches may also share their property for nonexempt acvies up to 50 days per year, 15 of those 50 days,
church property may be used for commercial or business acvies.
Examples of nonexempt acvies:
• The local Chamber of Commerce conducng a monthly club meeng.
• Fraternal organizaon hosng a social event.
• For-prot organizaon conducng an employee benet seminar.
Examples of commercial or business acvies:
• Music or tness instructor conducng their own classes for a fee.
• A for-prot weight loss program conducng group meengs.
• Church hosng a fesval/fair where individuals and companies sell products or services.
Fundraising
Fundraising events held on exempt property do not jeopardize the exempon, if the following are met:
• The event is sponsored by an exempt organizaon.
• Each event is limited to ve days or less.
• 51% or more of the net proceeds collected at each event must be paid to the sponsoring exempt
organizaon.
• The events are not frequent or regularly scheduled.
Fundraising acvies that are regularly scheduled on a daily, weekly or monthly basis (such as a weekly/
monthly bingo night) are considered to be business acvity, rather than occasional fundraising events. These
may only be conducted within the overall 15-day allowance for business acvity.
Churches may also co-host fundraising events sponsored by other qualifying nonprot organizaons, if this
criteria is met.
Recordkeeping
Churches that loan or rent their property to individuals or other organizaons under the current law must
maintain an accurate record or calendar of those uses throughout the year.
The calendar or spreadsheet must be provided to the department upon request. The calendar should include
the following elds:
• Date - the date of use
• Name - the name of the person or organizaon using the property
• Purpose - describe the event
• Income - the amount of any rent or donaon paid for the use
• Commercial Use - was the property used for pecuniary gain or business purposes
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Refunds for prior years
If you paid prior years’ taxes because of a mistake, oversight, or a lack of knowledge about this program, you
may be eligible for a refund. You must meet all of the qualicaons for the exempon as if you had applied at
the me the applicaon was due. A late applicaon will apply. In order to receive a refund, applicaons must
be led within three years of the date the taxes were due. Refunds will not be made beyond the three years.
Appeal process
Aer the department reviews your inial applicaon and/or renewal, they will issue a determinaon of
taxability. If you do not agree with the department’s determinaon, you have the right to appeal to the
Washington State Board of Tax Appeals (Board). Your appeal must be led with the Board within 30 calendar
days of the date the determinaon was mailed or emailed, as evidenced by the sent date. You must allow for
mailing me within the 30 day period. To obtain an appeal form, call the Board at 360-753-5446 or visit their
website at www.bta.state.wa.us.
Residency types
Parsonage
Means a residence owned by a church that is occupied by a licensed or ordained clergy person designated
for a parcular congregaon and responsible for conducng their religious services on a regular basis at
prearranged mes, days, and places. A parsonage does not need to be on the same property as the church to
qualify for exempon.
Caretaker’s residence
Means a residence owned by a church and located on the church site or conguous to the church site. Size of
the residence must be reasonable and appropriate in light of the dues performed. Caretaker must receive the
use of the residence as compensaon and is not required to pay rent.
Caretaker’s dues must include regular surveillance and patrolling of the property, or daily property
maintenance and property access control.
Convent
Means a residence owned by a church and occupied by a community of clergy or nuns devoted to religious life
under a superior. A convent does not need to be on the same property as the church to qualify for exempon.
Frequently Asked Quesons
Fundraisers: garage sales, bingo, and bazaars
Our church hosts a neighborhood garage sale one Saturday each month for a total of 12 events annually.
We invite congregaon and community members to sell their items in our parking lot for a $15 fee. Will this
jeopardize exempt status?
Maybe. Sales like this are considered to be business acvity. Community members that are keeping the
proceeds for their own benet are using the exempt property for pecuniary gain. Under the law, these events
will not jeopardize the exempon, if conducted on 15 days or less in a calendar year. Please be aware that the
limit applies to all pecuniary gain and business acvies. If one of these sales is done every month, the church
would be le with three remaining business acvity days to use for other events.
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Our church will host a neighborhood garage sale soon to raise funds for our missionary programs.
Congregaon or community members are invited to parcipate by selling their items in our parking lot. Our
church won’t charge a fee, and parcipants must agree to donate 51% of their net prot to our church. Will
this acvity jeopardize the exempt status of the property?
No. Because parcipants are reming 51% of their net prot to the host church, this is considered a qualifying
fundraising acvity. There is not a specic limitaon on the number of qualifying fundraising events a church
may host; however, fundraising acvies that are regularly scheduled on a daily, weekly, or monthly basis are
considered business acvity rather than “occasional fundraising events”.
Our church hosts a weekly Friday night bingo social. Each card is $2 and the players can win cash prizes. Will
this acvity jeopardize the exempt status of our property?
Probably. Because money is required to play and the winners receive money, it would be considered a
commercial acvity, which is limited to 15 days per year.
Our church hosts a bingo fundraiser twice a year. Each card is by donaon. All of the money that is raised is
kept by the church. The players can win non cash prizes such as plants, wreaths, homemade donated baked
goods, etc. Will this acvity jeopardize the exempt status of our property?
No. This is not commercial acvity because the use of the playing cards are by donaon, the winners do not
win a cash prize, and the church keeps the donaons. In addion, because it’s only held twice a year, it is
infrequent enough to be considered a fundraiser.
Our church hosts an annual Holiday Bazaar. Each individual or company pays a vendor fee to the church to
sell their products or services. Each individual keeps all money made from bazaar sales. Will this acvity
jeopardize our exempon?
Maybe. This type of event is considered commercial acvity and must be limited to no more than een days
per year. However, if the church were to keep at least 51% of the sales from the bazaar, it could be considered
a fundraiser, rather than commercial acvity.
Our church hosts a semi-annual bake sale. All baked goods are donated and the church retains all of the
proceeds from the sale. Will this acvity jeopardize our exempon?
No. This is not considered commercial acvity because the items for sale are all by donaon and all of the
money raised is kept by the church. Also, because it’s only held twice a year, it is infrequent enough to be
considered a fundraiser.
Special events
We oen allow community members (who are not members of our congregaon) to rent our chapel for
weddings. Will this jeopardize our exempt status?
Probably not. As long as your congregaon connues to use the facility for regularly scheduled worship and
the fee or donaon received from these rentals do not exceed the costs of operaon and maintenance of the
poron of the property loaned or rented.
A musical group would like to hold a community concert in our church. The group would charge admission
and/or sell merchandise during the concert. The church will not be charging a fee or receiving a donaon
from this group. Will this jeopardize the exempt status of the property?
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Maybe. The acvity conducted by the musical group is considered to be pecuniary gain or business acvity.
Business/pecuniary gain acvies will not jeopardize the exempon, if conducted on 15 days or less during the
calendar year.
Our church would like to host a community concert in our sanctuary. We will charge admission at the door.
We have hired a musical group to perform for a at fee (not based on aendance or door admission). We
will purchase merchandise which we plan to sell during the concert. Will this jeopardize the exempt status
of the property?
No. This is considered a qualifying fundraising acvity. There is no limitaon on the number of qualifying
fundraising events a church may host; however, fundraising acvies that are regularly scheduled on a daily,
weekly, or monthly basis are considered business acvity rather than “occasional fundraising events”.
Our church hosts several seminars each year on various topics (i.e. marriage, parenng, nancial, and health
issues). These seminars are presented by professionals within the community or industry. Congregaon and
community members are invited to parcipate. The presenters are not paid; however, they do market their
book and other items and related services during the seminars. Parcipants pay a fee, which covers the cost
of the seminar materials and traveling expenses of the presenter, if needed. Will this acvity jeopardize the
exempt status of the property?
Maybe. The acvity conducted by the presenters is considered to be pecuniary gain or business acvity.
Business/pecuniary acvies will not jeopardize the exempon, if conducted on 15 days or less during the
calendar year.
Clubs, classes, and tutoring
A congregaon member conducts a tness program in our church building. She charges parcipants $5 per
class. Will this jeopardize the exempt status of the property?
Yes. This program is considered to be business acvity when it is conducted by an individual or for- prot
organizaon. If the program is conducted on more than 15 days during the calendar year, the exempon would
be lost.
Our church would like to conduct a tness program for our community. We would hire an exercise instructor
for a at fee (not based on the number of parcipants or parcipaon fees). We would charge parcipants
$5 per class to cover the costs of providing the class. Will this jeopardize the exempt status of the property?
No. The acvity described is considered a church acvity conducted for church purposes on a nonprot basis.
Because the instructor will be hired to provide a service for the church and the parcipaon fee will be paid
directly to the church, and the fee does not exceed the church’s cost; the acvity is not considered to be a
pecuniary gain or business acvity.
Our church sponsors a scoung group. This group uses our recreaon hall each Thursday for scout meengs
and mulple Saturdays during the year for scout acvies. Will this acvity jeopardize the exempt status of
our property? What about hosng other scoung troops?
No. Because the scoung group is sponsored by the church, this acvity is considered a church acvity
conducted for church purposes. Sharing your property with other scout troops to conduct charitable character-
building acvies is generally ne as most scoung organizaons are nonprots conducng eleemosynary
acvity.
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One of our congregaon members holds her weekly weight loss program meengs in an unused bible study
room each week. Will this acvity jeopardize our exempon?
Maybe. If it is a weight loss club, where membership fees are paid and products, including food, are sold
onsite, it is considered commercial acvity and must be limited to no more than een mes per year.
A group of parents from our congregaon, who homeschool their children, use our facility to gather once
per week to socialize, exchange ideas, and provide addional study me for the students. The church does
not receive any income from the loan of this space. Addionally aendees do not pay a fee to aend this
weekly gathering. Will this jeopardize my exempon?
No. Because there is no cost to students to aend, there is no charge to rent the room, and this is considered
a qualifying charitable acvity.
Parsonages
Our church has a parsonage onsite, however, the church pastor has other housing. We have oered the
parsonage to a low-income family from our congregaon, who would otherwise be homeless. Will this
jeopardize our exempon?
Yes. The parsonage exempon only applies when the church’s primary licensed clergyperson lives onsite. If the
residence is being occupied by other church or community members, it no longer qualies for exempon. If
there are no occupants and the church is using the residence for other church acvies, it may sll qualify as
part of the church, rather than a parsonage.
Leased property
Our church leases several copy machines for which we make personal property tax payments to the leasing
company. Can we apply for a personal property tax exempon on our leased copy machines?
No. To qualify for the exempon the church must own the real or personal property. Leased property is
ineligible for exempon under RCW 84.36.020.
More informaon
RCW84.36.020, RCW84.36.800
WAC 458-16-110 and WAC 458-16-180 through 200
Quesons?
Department of Revenue Exempon and Deferral Program
PO Box 47471
Olympia WA 98504-7471
360-534-1400, DORnonprotapplicaon@dor.wa.gov
dor.wa.gov/PTexempons
Prepared by Customer Experience and
Communicaons Division
04/21