Property owned by religious, educational, charitable and cemetery organizations (or organizations organized and operated exclusively for the benefit of religious, educational, charitable and cemetery organizations, may obtain an exemption from property taxes in Nebraska, in whole or in part. There is a five-part test that must be met for the property to qualify. The test is:
- The property must be owned by a religious, educational, charitable or cemetery organization;
- The property must be used exclusively for religious, educational, charitable or cemetery purposes;
- The property may not be used for gain or profit for the owner or the user;
- The property may not be used for the sale of alcoholic liquor for more than 20 hours a week; and
- The property may not be owned or used by an organization which discriminates in membership or employment based on race, color, or national origin.
All five parts of the test must be met for property to qualify for tax exemption in Nebraska. An organization simply holding a tax exempt certificate from the Internal Revenue Service does not qualify property owned by the organization in Nebraska for a property tax exemption.
It is possible for real property to be partially exempt and partially taxable if, for example, segregable portions of the property qualify by meeting the five-part test and other portions of the property do not. In such cases, the non-exempt portion of the property will be valued and taxed.
Permissive exemptions require an annual application with the County Assessor. In the first year for which an exemption is sought and subsequent years divisible by four, the organization seeking the exemption must file a Form 451 and accompany it with the Questionnaire in which the Assessor’s Office asks a number of questions about the use of the property for which the exemption is sought. In the years in which the Form 451 is not required, the organization must file a Form 451A with the Assessor’s Office. Regardless of which form is required, the applications must be filed with the Assessor’s Office on or before December 31 of the year prior to the year for which the exemption is sought. For example, if an organization wishes to be exempt in 2014, the filing deadline is December 31, 2013.
If a charitable, educational, religious or cemetery organization obtains property or converts it to an exempt use after January 1 and on or before July 1, the property could still qualify for exemption for that tax year. The organization must file the Form 451, along with the Questionnaire, with the Assessor’s Office on or before July 1.
After receiving an application, the Assessor’s Office will review the application and make a recommendation to grant or deny the application. Ultimately, it is the County Board of Equalization that determines whether to grant or deny the application.