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Understanding the Real Estate Tax Exemption

Though commonly associated with individual homes, the term real estate covers a much broader range of building, including hospitals and non-profit buildings. Different tax exemptions apply to buildings based on what they are used for and how where they are located. It is important to understand the different types of property and what exemptions apply to properly file taxes for the property.

Property is treated differently than real estate. The Illinois Revenue website provides more information on tax exemptions for property. For those who still have questions, a real estate attorney can help ensure that all necessary rules and regulations are applied appropriately for tax filings.

Tax Exempt Real Estate

There are a number of different types of real estate that receive a range of tax exemptions. Each type has strict regulations to determine if the building qualifies for the exemption. Government buildings have different regulations on their tax exemption status than buildings used for religious purposes or charities.

One of the primary conditions to be eligible for tax exemption, most building types must be used strictly for their dedicated purposes. Once an organization profits from the use of the building for something else, such as renting out a portion or sharing the building with nonexempt organizations, the real estate will no longer be eligible.

Types of Tax Exempt Real Estate

Government Buildings

All federal buildings are exempt from property taxes, including those imposed on a state or local level.

Religious Buildings

Any building used exclusively for religious purposes is eligible for tax exemption status. If such a building is also used for profit, or with the intent to be profitable, the real estate will no longer be tax exempt.

Education Buildings

Buildings that are used exclusively for education are exempt from property taxes. However, if those operating the building rent out part of the building, the building will be subject to taxes.

Charitable Buildings

The charitable tax exemption has the greatest regulation to ensure that people do not claim the exemption without meeting the requirements. Two primary requirements must be proved prior to real estate being considered tax exempt.

  • The organization that owns the building must be a charitable organization.
  • The building is not used for anything other than charitable purposes.

To apply, the applicant must prove both of these before the exemption will be granted.

A real estate attorney can answer questions and provide guidance to apply for the real estate tax exemption status.

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