What Makes a Church Tax Exempt From Property Taxes in New Jersey?

New Jersey state law provides property tax exemptions for educational, religious and charitable organizations. Churches and other nonprofit organizations must qualify for an exemption based on their use of property. In a report published in 2004 by New Jersey Policy Perspective, Rutgers professor and associate dean Donald A. Krueckeberg said fully exempt property amounted to 13.4 percent of New Jersey’s total property value; church and charitable property accounted for 12.3 percent of the state’s tax-exempt property.


To qualify for a property tax exemption for a religious organization, church property must include a building — a church can’t get a tax exemption on vacant land. The church must be an association or corporation organized for religious purposes, and it must use its exempt buildings for its work. Assessors look at the use of church buildings to determine if the buildings qualify for tax exemptions. The state also allows an exemption for occupied parsonages.


Assessors tax property based on the value of buildings and land. In New Jersey, up to 5 acres of an exempt church building’s site is also exempt. The state’s handbook for assessors says the land must be necessary to the use of the property and devoted to the same purpose. Cemeteries, church-affiliated or not, qualify separately for tax exemptions in New Jersey. The church must own the property as of the date the state assesses it — Oct. 1 of the previous tax year.


Krueckeberg’s report on tax exemptions says New Jersey put specific property tax exemptions into its state constitution for the first time in 1851, although some property wasn’t taxed by custom before then. The 1851 constitution exempted property used for religious, educational, charitable and cemetery purposes. The 1947 state constitution kept those exemptions and expanded them to other property owned by nonprofit organizations, including church parsonages.


Church property is a relatively small percentage of New Jersey’s tax-exempt property in comparison with other tax-exempt property. Schools, including public schools and others, owned more than 24 percent of the state’s tax-exempt property in 2000, according to Krueckeberg’s report. Other public property — owned by federal, state and local governments — accounted for slightly more than 40 percent of the state’s tax-exempt property. In the New Jersey Department of Taxation’s 2009 annual report, it reported the total amount of church and charitable property exempt from taxation at $13.8 billion. For comparison, exempt public property amounted to nearly $47.6 billion. The total value of all types of tax-exempt property was $115.6 billion.