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Property Tax Exemption for Organizations Primarily Engaged in Charitable Activities
Property tax in Texas is a locally assessed and locally administered tax. There is no state property tax.
An organization engaged primarily in charitable activities may be eligible for a local property tax exemption.
Additionally, a corporation may be eligible for a local property tax exemption if it:
- Is exempt from federal income tax under Section 501(c)(2) of the Internal Revenue Code (IRC);
- Holds title to property for a qualified charitable organization;
- Collects income from the property for a qualified charitable organization; and
- Turns over the entire amount of income, less expenses, to a qualified charitable organization.
The organization for which the 501(c)(2) corporation holds title to property must meet certain requirements and be a qualified charitable organization that would qualify for exemption from taxation, if it owned the property.
Charitable Organizations
To qualify for a property tax exemption, an organization must be engaged primarily in performing one or more of the statutory charitable functions or hold title to property for such an organization.
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Once the organization obtains a determination letter for property tax exemption from the Comptroller’s office, and the local appraisal office determines the property is entitled to the exemption, the exemption applies to the following types of property used exclusively by the organization:
- Buildings (including incomplete improvements).
- Other real property.
- Tangible personal property.
An organization can be qualified but receive no benefit from the exemption because either it owns no property, or the appraisal district determines that the property is not used exclusively for qualifying charitable activities.
Qualifying for Exemption
An organization must apply for a “determination letter for property tax exemption” from the Comptroller’s office by completing Form AP-199, Texas Application for Organizations Engaged Primarily in Performing Charitable Functions and for Corporations that Hold Title to Property for Such Organizations (PDF). The Comptroller’s office may also request other additional information.
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Within 90 days, a qualifying organization will receive a determination letter from the Comptroller’s office stating whether the organization is eligible to apply to its local tax appraisal district for the property tax exemption. The local tax appraisal district will decide if an individual organization’s property qualifies for exemption upon receipt of Form 50-299, Application for Primarily Charitable Organization Property Tax Exemption (PDF) and the determination letter issued to the organization by the Comptroller’s office.
The local chief appraiser makes the final determination for an organization’s qualification for exemption based on:
- Receipt of the Comptroller’s determination letter; and
- Whether the appraisal district determines the property is used exclusively by the organization for charitable purposes.
A qualifying organization must reapply and obtain a new determination letter every five years.
Additional Resources
- Search for Organizations Eligible for Property Tax Exemptions
- Tax Exemptions for Qualified Organizations
- Property Tax Assistance
94-166
(01/2020)