Case Law Summaries

Judaic Heritage Foundation v. Freehold Borough

• Opinion Date: November 27, 2001
• Real Property Law
• E-Mail

TAXATION; PARSONAGES—For a religious institution to qualify for a parsonage exemption, it must have a congregation and conduct religious services.

A rabbi served a synagogue for 27 years until he retired in 1998. He continued to live in the tax-exempt parsonage. As part of his contract of employment, he had a portion of his salary deducted and used that portion to pay for an ownership interest in the parsonage. Upon his retirement, in accordance with his agreement with his congregation, the rabbi was to be given the house. Instead of taking title in his own name, title was transferred to a foundation organized to promote religious values and to form another synagogue. Upon transfer of the parsonage, it was assessed as taxable by the municipality’s assessor. The foundation reached a stipulation with the municipality’s tax collector that it was a tax-exempt entity and that if the use of the property met the qualifications as a parsonage, the property would qualify for exemption from taxation. The rabbi testified that since his retirement he was exclusively occupied with the work of the foundation. His activities included the conduct of funerals, weddings, other religious events, and the performance of prayer services within the building. Those prayer services had been conducted in the house even before the rabbi retired. The foundation had virtually no funds and relied on voluntary contributions which it used to maintain the house and an automobile, and to pay its other related operating expenses. The rabbi received no remuneration. The services conducted at the house were by invitation only because the property was too small to accommodate a large number of people. In essence, the rabbi contended that the foundation constituted a qualifying congregation within the meaning of N.J.S. 54:4-3.6. Therefore, because he was an active clergyperson residing in a house furnished by the congregation, the house should be exempt from taxation. Under the relevant law, an officiating clergyman has been defined as “a settled or incumbent pastor or minister, that is, a pastor installed over a parish, church, or congregation.” If the clergyman’s duties and activities “sound like those performed by congregational leaders of all religious denominations, a clergyman is considered an officiating clergyman of the religious corporation.” On the other hand, “[t]he parsonage exemption is a derivative exemption ... . If there is no exempt church there can be no parsonage exemption.” No claim was made that the building was a synagogue or other religious establishment. “It is and also has been a residence.” There was no question that when the rabbi was actively employed by his original synagogue, the subject property was a parsonage. Here, according the Court, when the residence that was formerly a parsonage for an active congregation became “the retirement home and center of administration of a tax exempt foundation run by the Congregation’s former rabbi, it is no longer a parsonage.” Even though the foundation may have among its purposes the establishment of a synagogue and a religious congregation, it had not yet done so. Consequently, the foundation did not evidence the “indicia of qualification as a congregation, for which there is a need for an officiating clergyman whose residence may enjoy the parsonage exemption, [which] include a synagogue or other tax exempt building, a group of congregants, and regular services or meetings to which the public is invited.” All residences of all clergymen are not parsonages. Here, where the foundation failed to establish that it was a regular church or congregation, the property did not qualify as a parsonage and was not tax exempt on that basis.

Copyright ©2003. Meislik & Meislik. All rights reserved.