Common questions about non-profit/charitable tax exemptions

The California State Legislature can exempt property that meets both of the following:

• It is used only for religious, hospital, charitable, or scientific purposes.
• It is owned or held in trust by a nonprofit organization that operates for those purposes.

This exemption is commonly known as the welfare exemption. Voters first approved it as a constitutional amendment on November 7, 1944. In 1945, the Legislature added “scientific” use to the exemption and created California Revenue & Taxation Code section 214 to support it.

To learn more, see the California State Board of Equalization’s publication, Property Tax Welfare Exemption.

In general, the welfare exemption from local property tax is available to organizations that:

• Are formed and operated only for religious, scientific, hospital, or charitable purposes, and
• Use their property only for those same purposes.

Both the way the organization is set up and how the property is used must meet the legal requirements for the exemption to apply.

The welfare exemption is jointly managed by the California State Board of Equalization (BOE) and the Marin County Assessor’s Office.

• The BOE decides if an organization qualifies for the exemption.
• The Assessor’s Office decides if the property use qualifies.

If the BOE finds the organization eligible, it issues an Organizational Clearance Certificate (OCC). This certificate must be included with exemption claim forms filed in any of California’s 58 counties.

In Marin County:

• The Assessor reviews each claim to decide if the property use meets the requirements in California Revenue and Taxation Code Section 214.
• This decision is made independently and is not reviewed by BOE staff.
• The Assessor cannot approve a claim without a valid OCC.
• Even with an OCC, the Assessor may deny a claim if the property use does not meet legal requirements.

The Marin County Assessor may not grant a claim unless the organization holds a valid Organizational Clearance Certificate issued by the California State Board of Equalization. To apply for an Organizational Clearance Certificate, the organization must file Claim for Organizational Clearance Certificate-Welfare Exemption with the California State Board of Equalization. The organization must also file for Exemption with the Marin County Assessor.

How to apply for the welfare exemption

The Marin County Assessor cannot approve a welfare exemption claim unless the organization has a valid Organizational Clearance Certificate (OCC) from the California State Board of Equalization (BOE).

To apply:

1. Apply for an  Organizational Clearance Certificate (OCC)
   • File Claim form BOE-277 with the BOE.
2. File an exemption claim with the Marin County Assessor
   • The organization must also submit a separate exemption claim to the Assessor's Office for the property in Marin County.

Both the OCC and the local exemption claim are required.

Organizations must file a welfare exemption claim each year with the Marin County Assessor.

• The filing deadline is February 15.
• If the claim is filed after February 15, a partial exemption may still be granted.
• The Assessor cannot approve a claim unless the organization has a valid Organizational Clearance Certificate (OCC) issued by the California State Board of Equalization.

Claims are filed on the following forms:

• BOE-267: Claim for Welfare Exemption (First Filing), (claim form for initial request of welfare exemption for a specific property when the claimant is a new filing in the county or requesting exemption for a new location in the county).
• BOE-267-A: Claim for Welfare Exemption (Annual Filing), (claim form filed on an annual basis after initial "been met" finding. May be filed on properties that were granted exemption in the prior year).

Supplemental affidavits are also required for certain property types:

• BOE-267-H: Welfare Exemption Supplemental Affidavit, Housing-Elderly or Handicapped Families, (claim form filed for properties used for housing for elderly or handicapped families).
• BOE-267-L: Welfare Exemption Supplemental Affidavit, Housing-Lower-Income Households, (claim form filed for properties used for low-income households).
• BOE-267-L1: Welfare Exemption Supplemental Affidavit, Low-Income Housing Property of Limited Partnership, (claim form filed for properties used for low-income households owned by limited partnerships).
• BOE-267-R: Welfare Exemption Supplemental Affidavit, Rehabilitation-Living Quarters, (claim form filed for properties used for rehabilitation and associated living quarters).

Late filing and refund limits

An organization may file a welfare exemption claim at any time. However, a late-filing penalty may apply.

By law, refunds of property taxes are limited to 4 years from the date the taxes were paid — regardless of when the claim is filed.

Being exempt from income tax does not automatically make a nonprofit organization exempt from property tax.

To qualify for the welfare exemption, both of the following must be true:

• The property is owned by a nonprofit organization.
• The property is used only for a religious, scientific, hospital, or charitable purpose.

Owning the property isn’t enough; the way the property is used must also qualify.

Some uses do not qualify for the exemption, even if the owner is a nonprofit:

• Fundraising activities;
• Unrelated business operations;
• Letting others use the property for private or non-qualifying purposes.

Mid-year property purchases and the welfare exemption

The law allows mid-year exemptions for property acquired by a qualified organization.

To qualify for exemption from supplemental assessment, the organization must:

• Be a qualified nonprofit, and
• Meet the exemption requirements within 180 days of the change in ownership or the completion of new construction.

Tax cancellation based on acquisition date

• If the property is acquired between January 1 and June 30:
  • A full cancellation of taxes may be granted for the next fiscal year (starting July 1).
• If the property is acquired between July 1 and December 31:
  • A prorated cancellation may be granted from the date of acquisition through June 30.

(Property tax bills are handled at the county level.)

How to apply

• File a Welfare or Veterans' Organization Exemption claim with the Marin County Assessor’s Office.
• The Assessor reviews the property’s use to determine if it qualifies under Revenue and Taxation Code section 214.
• The Assessor cannot approve the claim unless the organization has a valid Organizational Clearance Certificate (OCC) from the California State Board of Equalization.