AB 771

Current law provides a property tax exemption for property owned by

educational associations and institutions, benevolent associations, churches,

religious associations, and certain nonprofit entities licensed by the Department of

Health Services. Leasing such property does not render the property taxable as long

as the lessor uses the leasehold income for maintenance or construction debt

retirement of the leased property. However, current law allows some leased property

to retain its exemption regardless of how the leasehold income is used. For example,

leasing a part of property that is owned and operated by a licensed nonprofit entity

as residential housing does not render the property taxable, regardless of how the

lessor uses the leasehold income.

Under this bill, leasing all or part of any property owned by a church or religious

organization to an educational association or institution that is also exempt from

taxation does not render the property taxable, regardless of how the lessor uses the

leasehold income.

Because this bill relates to an exemption from state or local taxes, it may be

referred to the Joint Survey Committee on Tax Exemptions for a report to be printed

as an appendix to the bill.