Most charitable organizations in Texas are aware that they are exempt from sales tax and franchise tax. And, while it’s reasonable to assume that this exemption extends to property taxes, that is unfortunately not always the case. Only a select subset of charitable organizations are granted exemption from taxes on real estate and business personal property. Property tax exemption rules are set by each county, so be sure to check the rules before you assume your organization will not owe taxes on that brand new building. Travis County offers several different types of exemptions, although many charities are surprised to find that their good deeds aren’t on the list of exempt activities.
Organizations that do qualify for exemption in Travis County must apply using one of the forms under Other Exemptions here. If your activities do not fall into one of the exemption options, which are set by the Texas Tax Code Section 11, you most likely will owe tax on real and personal property owned by the organization. Organizations that are not 501(c)(3) charities can qualify for exemption for property that is used for one of the specific activities on the exemption forms. However, these organizations require a further step prior to filing the Travis County form – they must obtain a determination letter from the Texas Comptroller. This is not the IRS determination letter, but a specific form that must be requested from the Comptroller for the sole purpose of getting a property tax exemption.
If your organization does owe taxes on business personal property (furniture, equipment, computers, etc.), be sure to file your property tax rendition form by April 15 each year and record each item of property. Checking the box “under $20,000” for the value of your property will typically result in Travis County assuming your property is worth $19,999, so make it known if your property is worth less than that. You may owe tax, but it doesn’t have to break your budget!
