The Ohio Supreme Court just announced in a 4-3 decision that you don’t get an exemption from paying your property taxes just because you declare your house a “spiritual retreat” and invite priests to stay over.
The case involved “Innkeeper Ministries,” a 71-acre home owned by Robert and Janet Hartenstein. They lived there full-time, but also invited local church leaders to take sabbaticals whenever they wanted. In return, the Hartensteins made them food, took no money, and offered counseling. All of that is kind and generous, but it doesn’t mean the house qualifies for a tax exemption. When the Hartensteins were denied the exemption in 2008, they sued and (eventually) won the tax break, which the Supreme Court finally overturned today.
Citing its 2006 First Baptist Church of Milford v. Wilkins decision, the Court stated the charitable use exemption applies to property used exclusively for charitable purposes and once a premise is used by a family as a permanent residence, the property no longer is exclusively used for charity.
The Court noted that while the Hartensteins established a nonprofit corporation as the property owner, the couple failed to provide evidence of how many sought to use the space, how many guests it served, and how many it turned away, which is the kind of documentation expected of a nonprofit charitable institution.“The record here shows ownership by a 501(C)(3) entity, but that entity is controlled by the Hartensteins. Moreover, the accommodation of guests at no costs in a spacious residence cannot by itself turn the residence into a charity,” the opinion stated.
It’s the right move. Had the exemption remained in place, what’s to stop anyone else from getting out of paying property taxes by throwing pastors a bone every once in a while? There needs to be a clear delineation between what counts as charity and what counts as Christians just doing something nice. The former requires paperwork and numbers, allowing others to keep track of what they do. The couple in question here didn’t follow protocol on any of that.
To be clear, no one’s stopping them from continuing to provide a vacation destination for pastors. But they’re not getting a gift from the government for living in their own house.
(Thanks to Tom for the link)