Indiana Tax Court: No “Per Se” Tax Exemption for Assisted Living Providers

In a case before the Indiana Tax Court published on February 16, 2012, an Indiana county hospital Foundation argued that it was entitled to a per se exemption from property tax solely because the assisted living facility that it leased to a for-profit entity provides for the needs of the elderly. The Foundation’s argument relied on precedent, holding that independent apartments (“The Villas”) located on a campus that also operates an assisted living facility and a nursing home qualified for exemption from property tax because:

“[T]he needs of senior citizens are not exclusively financial, nor are they merely health-related. Indeed, seniors also need a sense of community and involvement. Id. at 815. Seniors need a sense of security and safety. Id. Seniors need social interaction. Id. Seniors need supportive services that enable them to live more independently for a longer period of time.  Id. Seniors need to function at active levels. Id. The Villas meet all these needs and are  thus owned, occupied, and used for a charitable purpose.”

Wittenberg Lutheran Village Endowment Corp. v. Lake County Property Tax Assessment Board of Appeals, 782 N.E.2d 483, 488-89 (Ind. Tax Ct. 2003), review denied; quoting Raintree Friends Housing, Inc. v. Indiana Department of State Revenue, 667 N.E.2d 810, 814-815 (Ind. Tax Ct. 1996).

The Tax Court clarified that “neither the language of one case nor an apparent trend from several cases has established a per se rule that an assisted living facility that cares for the elderly is automatically considered exempt by the mere character of its deeds.”  Tipton County Health Care Found., Inc. v. Tipton County Assessor, 961 N.E.2d 1048, 1052 (Ind. T.C. 2012). 

This case establishes that where the owner and operator of an assisted living facility are not the same entity, and particularly where the operator is a for-profit entity, both entities must be prepared to justify an exemption from property tax by providing evidence of their separate charitable purposes, “not simply the accomplishment of good and noble deeds, to ensure that: 1) the benefit conferred by the exemption relieves government of a cost it would otherwise bear, and 2) the exemption’s largess does not primarily fulfill a commercial profit motive.” Id. at 1052.