The deadline for filing 2025 property tax assessment appeals in Allegheny County has expired, but March 31, 2025, remains the deadline for (i) qualified non-profits that own real estate in Allegheny County to file an application seeking a new exemption from the payment of real estate taxes; and (ii) for municipalities to challenge current exemptions. Owners of properties currently identified as exempt do not need to file an application to continue the exemption.
The Pennsylvania Constitution provides that the General Assembly may exempt Institutions of Purely Public Charity (“IPPC”) from taxation. Pa. Const. art. VIII, § 2(a)(v). In determining whether an institution is eligible for a real estate tax exemption the institution must establish that it is an IPPC under the Pennsylvania Constitution and the Institutions of Purely Public Charity Act 10 P.S. §§ 371-385 (“Act 55”).
The HUP test is the “test for determining whether an entity qualifies as an IPPC under the Pennsylvania Constitution.” Alliance Home of Carlisle, Pa. v. Board of Assessment Appeals, 591 Pa. 436, 453, 919 A.2d 206, 216 (2007). An IPPC must meet all of the following criteria:
- Advances a charitable purpose;
- Donates or renders gratuitously a substantial portion of its services;
- Benefits a substantial and indefinite class of persons who are legitimate subjects of charity;
- Relieves the government of some of its burden; and
- Operates entirely free from private profit motive.
Hospital Utilization Project v. Commonwealth, 507 Pa. 1, 22, 487 A.2d 1306, 1317 (1985).
To satisfy Act 55’s requirements, the institution must prove that it:
- Advances a charitable purpose;
- Operates entirely free from private profit motive;
- Donates or renders gratuitously a substantial portion of its services;
- Benefits a substantial and indefinite class of persons who are legitimate subjects of charity; and,
- Relieves the government of some of its burden.
After an institution meets both the HUP Test and Act 55, qualifying as an IPPC, the IPPC must prove that the property for which it seeks the tax exemption is regularly used for the purposes of the institution or is used to advance the charitable purpose of the institution. An institution that satisfies the HUP Test, Act 55, and the General County Assessment Law is exempt from real estate taxation.
Because the general rule is that all real estate not owned by a government is subject to taxation, a non-profit always has the burden of proving entitlement to the exemption. Already a difficult burden for a property owner to satisfy, a series of recent Commonwealth Court opinions arising from appeals filed by the Towner Health System in eastern Pennsylvania has brought further scrutiny to charitable organizations.
If you have questions regarding real estate tax exemption for non-profits or wish to discussion the Application process, please contact Alisa Carr.