Property taxes in New Jersey inexorably increase despite legislative efforts to reform the system to reduce the burden. Depending on the legal status of the owner and use of the land, a property might enjoy tax-exempt status and be subject to little or no real estate property taxes.

Because there are many different types of exemptions permitted by statute, we will focus on the necessary ingredients for exemption and issues potentially confronting a non-profit or a buyer of its property that might affect its vested exemption from paying property taxes. Under the New Jersey Constitution and Tax Exempt Statute, a non-profit organization is exempt from paying real estate taxes on the land and building it owns provided that the buildings are actually used to further charitable purposes.

The Tax Exemption Statute exempts property owned by non-profits from taxation if: (1) the building(s) actually and exclusively is used for one of the designated purposes; (2) the land is necessary for the fair enjoyment of the building(s), is devoted to a designated purpose and does not exceed five acres; and (3) the building(s) or land is not used for profit and the organization is not a profit-making institution.

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