Property Taxes and Indiana Nonprofits

Many Indiana nonprofits are surprised to learn that being tax exempt for income tax purposes does not automatically mean you are exempt from property taxes. Indiana treats property tax exemptions as use based, not status based and the filing requirements can trip up even well run organizations.

Here’s what Indiana nonprofits need to know about property taxes.

1. Indiana Property Taxes: The Basics for Nonprofits

Indiana property tax applies to:
• Real property (land and buildings), and
• Business tangible personal property (furniture, equipment, computers, etc.)

Indiana law allows exemptions for property owned, occupied, and used for charitable, educational, literary, scientific, or religious purposes but exemptions are not automatic and must be properly claimed.

A nonprofit may be exempt from income tax and still owe property taxes if required forms are not filed or maintained. Or an organization may only receive a partial exemption on its property and must pay property taxes on the non-exempt portion of property.

2. The Nonprofit Exemption

Real property and business tangible personal property may qualify for exemption if it is:
• Owned by the nonprofit
• Occupied by the nonprofit
• Used predominantly for exempt purposes (charitable, educational, religious, etc.) under IC 6 1.1 10 16.

Leasing property to others, even other nonprofits, can jeopardize the exemption if not structured carefully.

To claim a nonprofit property exemption, nonprofits must file Form 136, Application for Property Tax Exemption, with the county assessor of the county where the property is located by April 1st of the assessment year (the year prior to the billing date). The application must also include a copy of the organization’s articles of incorporation, bylaws, financial statements for the last 3 years, and predominant use breakdown detailing how any land and/or each room in any building is used.

Once the exemption is filed the Property Tax Assessment Board of Appeals (PTABOA) may issue a full approval, a partial approval, or a denial. A partial exemption may be granted when only part of a property, or part of its use, qualifies as exempt. The exemption is based on actual use, not the organization’s tax-exempt status. This commonly occurs when a nonprofit owns a building and leases part of the space for non-exempt purposes through a commercial lease. The portion of the building used by the nonprofit for its exempt purpose normally qualifies for exemption, while the portion of the building under lease may not qualify for exemption.

If the exemption is approved, the organization does not need to re-file the exemption in future years, but it is required to notify the assessor’s office in the event the property has a change in use or a change in ownership. If a change occurs, the nonprofit must file Form 136-CO/U, Notice of Change of Ownership or Use of Exempt Property, with the assessor’s office.

Even if a nonprofit receives an exemption from paying property taxes, it still must file Form 103, Business Tangible Personal Property Assessment Return each year with the assessor’s office to report its personal property. Ther return is due May 15 and cannot be extended. Penalties apply for late filings.

3. Churches and Religious Organizations

Effective January 1,2023, per IC 6-1.1-3-7, churches and religious organizations that filed their personal property return every year for the previous five years are no longer required to file a personal property tax return. If the church or religious organization has a change of ownership or change resulting in the personal property no longer qualifying for the exemption, a personal property tax return is required to be filed.

4. Personal Property Tax Exemption

Indiana also offers a business personal property exemption (for either for-profit or nonprofit) if the cost of a taxpayer’s total business property falls under a set dollar threshold. The threshold for this exemption was increased from $80,000 to $2,000,000 per county for 2026. The taxpayer must declare the exemption by marking the checkbox at the top of Form 103, Business Tangible Personal Property Assessment Return indicating the cost of its assets is less than $2,000,000 and stating the total acquisition costs. Form 103 must be filed by May 15. As long as the entity continues to qualify for this exemption (total personal property costs are less than $2,000,000), no personal property tax return is required to be filed each year. If the taxpayer no longer qualifies for the exemption, a return must be filed and taxes paid.

What should you do?

Most nonprofits have likely filed an exemption from property taxes under the nonprofit exemption in the past. As a result, they have been exempt from paying property taxes but have had to still file a personal property tax return each year. With the increase in the personal property tax exemption to $2,000,000, it may be beneficial for those nonprofits that have less than $2,000,000 in personal property to file an exemption under the personal property tax exemption instead so that the organization does not have to file an annual property tax return. By filing the personal property tax exemption, the nonprofit exemption no longer applies so if the cost of personal property exceeded $2,000,000, the organization would be required to file a personal property tax return and pay property taxes. However, each assessment date stands alone, and Form 136 can be refiled to make the claim back to the nonprofit exemption. Just make sure that Form 136 is filed not more than 30 days after the filing date for the personal property tax return (by June 14).

Also, the $2,000,000 exemption only applies to personal property. It has no bearing on real estate exemptions for nonprofits and any real estate exemption that was filed in the past under Form 136 still remains. If a nonprofit makes future real property purchases, it should continue to file Form 136 to receive a property tax exemption for real property.