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West Virginia High Court Rules Non-Profit Entitled To Property Tax Exemption For Leased Property


HLD, v. 34, n. 1 (January 2006)

West Virginia High Court Rules Non-Profit Entitled To Property Tax Exemption For Leased Property


A non-profit � 501(c)(3) corporation that leases property it owns to another non-profit that provides emergency services state-wide is entitled to an exemption from ad valorem property taxes, the West Virginia high court ruled November 29.


Appalachian Emergency Medical Services, Inc. (AEMS) is a � 501(c)(3) non-profit corporation organized to assist emergency medical services in certain West Virginia counties. AEMS leases a building it owns to the West Virginia Emergency Medical Services Technical Support Network (TSN), a state-wide non-profit that supports county-level based emergency services organizations.


The county assessor concluded that AEMS' property was subject to ad valorem property taxation and the State Tax Commissioner agreed. According to the Tax Commissioner, AEMS was collecting "market rent" because it received more in rent every month from TSN than what was due under the mortgage. The trial court affirmed the Tax Commissioner's decision.


The West Virginia Supreme Court of Appeals reversed. State law exempts real property from ad valorem taxation according to a two-part test--namely (1) that the corporation be deemed a charitable organization under � 501(c)(3) or � 501(c)(4) of the Internal Revenue Code; and (2) that the property be used exclusively for charitable purposes and not be held or leased out for profit.


The high court found both these conditions were satisfied. After noting no dispute as to AEMS' � 501(c)(3) status, the high court went on to hold that the property at issue was used by TSN exclusively for charitable purposes. "We conclude that the property is used  for charitable purposes in that TSN uses it to further its mission of assisting emergency services organizations to relieve human suffering," the high court wrote.


Finally, the high court determined that AEMS was not profiting from the lease of the property to TSN. Specifically, the high court found that the lease payments, either in whole or substantial part, were being used for AEMS' monthly mortgage payments. Any portion not used for the mortgage was placed in escrow to pay for building maintenance or repair. "Therefore, we find that the circuit court clearly erred in its finding that AEMS is leasing its property for profit," the high court concluded.


Appalachian Emergency Med. Servs., Inc. v. State Tax Comm'r, No. 02-C-0239 (W. Va. Nov. 29, 2005). To read the case, go to


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