The Massachusetts “Return of Property Held for Charitable Purposes” (Form 3ABC) provides for an exemption from local taxation on personal and real property for eligible charitable organizations. As a reminder, in order to be exempt, you must file an annual Form 3ABC, due at the Assessor’s Office no later than March 1, in each city or town in which your organization owns real or personal property. A copy of your most recently filed Form 990 and Form PC must accompany the return (unless you are not required to file a Form PC).
Who must file?
State Tax Form 3ABC must be filed each year by all charitable, benevolent, educational, literary, temperance or scientific organizations and trusts owning real or personal property on January 1 in order to receive a local tax exemption on that property for the fiscal year that begins the next July 1. Veteran organizations seeking exemption of real or personal property must also file this return.
A charitable organization is exempt from local taxation on:
- All personal property it owns regardless of use (equipment, furniture, etc.)
- Registered motor vehicles owned or leased to your organization and garaged in the city or town on January 1.
- Real Estate owned by or held in trust for the organization, and occupied by the organization or its officers for its charitable purposes. The property may also be occupied by another charity, or its officers, for its charitable purposes.
- Real estate bought by the organization with the intention of future charitable use. The property need not be occupied immediately. However, if it is not occupied for charitable use within two years of the acquisition, it becomes taxable until put to such use.
All other real estate owned by a charitable organization is taxable. This includes property leased to individuals and non-charitable entities, or occupied or used for non-charitable purposes. In addition, property owned by a taxable individual or entity remains taxable even if leased to and occupied by a charity.
AAFCPAs urges you to add the Form 3ABC to your tracking lists with a due date of March 1. Taking action now will help prevent your organization from paying unnecessary taxes.