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Volume 7 - Opinions of Counsel SBEA No. 72

Opinions of Counsel index

Municipal corporations exemption (private ownership) (municipal use); Correction of errors (omission) (taxable real property listed as exempt) - Real Property Tax Law, §§ 406, 550:

Municipal use of privately owned real property does not constitute an in-kind “payment” in lieu of taxes, which would authorize an exemption or a “forgiveness” of taxes due.

Real property owned by a private estate is being used by a town Youth Commission. This use has apparently been considered in the nature of a “payment” in lieu of taxes. It is unclear whether the property has been entered on the assessment roll as exempt or taxable with payment of taxes waived. We are asked if this property will become liable for taxes not paid during the period it has been used by the town, if it is leased or sold to a non-profit organization.

All real property in New York State is subject to taxation unless specifically exempted therefrom by law (Real Property Tax Law, § 300). While municipally owned real property is entitled to exemption if located within the owning municipality’s boundaries and held for a public use (§ 406(1)), there is no exemption available to real property simply used for municipal purposes if privately owned.

Municipalities and their officers have only such powers as are expressly conferred by statute or necessarily implied (see, Woods v. Madison County Supervisors, 136 N.Y. 403 (1892)). There is no authority for an assessor to exempt privately owned real property in return for municipal use of that property. Similarly, there is no statutory authority, express or implied, which would permit a town to waive or “forgive” taxes otherwise due on privately owned real property. The use of the property or service provided to the community is irrelevant (see, e.g., Op. State Compt. 60-174).

If this property was entered on the exempt portion of the town’s tentative assessment roll, it should be considered as an “omission”, as defined in subdivision 4-a of section 550 of the Real Property Tax Law. Its assessed value must then be added to the next final (§ 553(l)(d)) or tentative (§ 551) assessment roll and taxed at the rate(s) applicable to all other real property for the year in question. (On the other hand, if the town has attempted to waive or “forgive” taxes levied against the property, the appropriate collecting officer should notify the owner of the amount due and unpaid (§ 922(1)).

A lease or sale to a non-profit organization will not affect this property’s current liability for taxes. The right to an exemption is determined by a parcel’s condition and ownership as of taxable status date, which is May 1 in most towns in this State. If the property was not entitled to exemption, as of such date, a subsequent change in condition or ownership will not affect its liability for taxes.

With respect to taxes for any subsequent years, as in the case of the exemption available to municipal real property, mere use by a nonprofit organization does not qualify real property for exemption if owned by an otherwise taxable entity or person (but cf., § 420(2)). Section 420 of the Real Property Tax Law requires that real property be owned by the non-profit organization to qualify for exemption thereunder.

July 22, 1980

Updated: