Benjamin Franklin once wrote “nothing is certain except death and taxes.” While this famous quote still rings true, there are a few valuable exceptions. Under Article 8, Section 2 of the Pennsylvania Constitution, the General Assembly may enact laws exempting certain properties from taxation. For instance, Section 204(a)(2) of the General County Assessment Law (the “Act”) provides that “[a]ll actual places of burial, including burial grounds and all mausoleums, vaults, crypts or structures intended to hold or contain the bodies of the dead” shall be exempt from all county, city, borough, town, township, road, poor and school tax. In addition to cemeteries, there are 12 other types of properties that are exempt under Section 204(a) of the Act.

However, while a portion of a property may be exempt from taxation under Section 204, other portions of the same property may not. The extent of a property’s exemption depends on the specific language employed in Section 204. Indeed, whereas Section 204(a)(2) exempts “actual places of burial”, Section 204(a)(1) exempts “churches, meeting-houses, or other actual places of regularly stated religious worship, with the ground thereto annexed necessary for the occupancy and enjoyment of the same.” Other exemptions under Section 204(a) include similar language that can make it difficult to pinpoint the extent of a property’s exemption. That said, it is clear that the use of all portions of the property must be considered, and not only the use of buildings or improvements.

To further illustrate the issue, in the Commonwealth Court’s 1978 decision, Appeal of Catasauqua Area School District, the Woodlawn Memorial Park Association (“Woodlawn”) acquired a 20.3-acre parcel of land, 3.6 acres of which were seeded, landscaped, and provided with an access road. Woodlawn then sold the first three plots and conducted two burials on the 3.6 acres. When Woodlawn applied for and was granted a tax exemption for the entire 20.3 acres by the Lehigh County Board of Assessment Appeals (“Board”), the Catasauqua Area School District appealed the Board’s decision. In response, Woodlawn argued that the entire tract should be exempt from taxation because it was intended for use as a burial ground and was being developed for that purpose.

Relying on the text of Section 204, the court found that the exemption for burial places is narrowly construed because Section 204 provided an exemption for “actual places of burial” and not “all burial grounds.” (emphasis added). Thus, the exemption must be limited to places which are in fact presently used as burial sites. The court also noted that Section 204(b) of the Act supports this finding because it states “all property real or personal, other than that which is actually and regularly used and occupied for the purposes specified in this section, . . . shall be subject to taxation . . . .”. Ultimately, the court held that the 3.6 acres of land was exempt from taxation because two burials took place on that portion of the tract, it was seeded and landscaped, included an access road, and was presently fully prepared to accommodate more burials. However, the remainder of the tract was not exempt because it was in the planning and preparation stages of development, no burials took place on that area, and it was not immediately ready to accommodate burials.

As you can see, tax exemption provisions are narrowly construed based on the statutory language establishing the exemption. Therefore, it is important to identify the current use of your land as well as the scope of that use in determining the extent of any tax exemption.

If you have any questions about this post or real estate tax issues generally, please contact the McNees Wallace & Nurick Real Estate or State and Local Tax Group for assistance.