- Introduction
- Acknowledgements
- 1: Getting Ready
- 2: The Costs of Space
- 3: Understanding Credit
- 4: Professional Services
- 5: Finding Space
- 6: Residential Leases
- 7: Commercial and Industrial Leases
- 8: Buying Real Estate
- 9: Types of Mortgages
- 10: The Mortgage Application
- 11: Ownership Models
- 12: Purchasing Alternatives
- 13: Chicago Zoning Ordinance
- 14: Chicago Building Code
- 15: Chicago's Neighborhoods
- 16: Property Taxes
- 17: When You Find a Property
- 18: Inspections
- 19: After Moving In
- 20: Insurance
- 21: Utilities
- 22: Rehabbing Your Space
- 23: Safe and Healthy Spaces
- 24: Green Practice
- 25: When Disputes Arise
- 26: Space Emergencies
- 27: Facility Development Planning
- Bibliography
Exemption Scenarios
This section examines various scenarios in which an exemption is granted or denied, and offers reasons for denial or acceptance. Every exemption request is different, so contact the Cook County Board of Review for additional assistance, or speak to a property tax attorney who has experience with nonprofit exemptions and/or arts organizations. See Chapter 4: Professional Services for information on hiring an attorney.
Because it can take six months or longer (5-7 years is typical) to secure nonprofit exemption status, apply as soon as possible. Depending on how you are using the space, you might also want to consider filing an appeal with the Assessor’s Office while you wait for notifiation regarding your exemption status. Again, a property tax attorney can help you figure out which direction to take.
Scenario A
A building owned by a business is in exclusive use for visiting artists, who offer free classes for neighborhood children as part of their residency. There is no rent or lease involved. The space is used for free by all visiting artists. Is it exempt?
A building owned by a nonprofit art center is used exclusively as an art gallery and performance space. The building is situated in a busy business district, and is open to the public. No work is sold at the space, and artists and performers that use the space must offer a free public lecture about their work. The space is used without charge to the artists once they apply and are accepted to the residency program. Is it exempt?
A small art school purchases a property for use in the indefinite future. Is the space exempt?
A performance artist coalition decides to offer a number of free public education events and free lectures each month. The group will continue to offer their regular club activities, which focus primarily on professional development workshops, guest speakers and participation in exclusive events and activities. The workshops and a majority of the exclusive events and activities are for coalition members only.
Because it can take six months or longer (5-7 years is typical) to secure nonprofit exemption status, apply as soon as possible. Depending on how you are using the space, you might also want to consider filing an appeal with the Assessor’s Office while you wait for notifiation regarding your exemption status. Again, a property tax attorney can help you figure out which direction to take.
Scenario A
A building owned by a business is in exclusive use for visiting artists, who offer free classes for neighborhood children as part of their residency. There is no rent or lease involved. The space is used for free by all visiting artists. Is it exempt?
- No. The law requires that the building be owned as well as used by a charitable organization. Even though the use is for charitable purposes, this is not enough; the owner of the building is a for-profit enterprise.
A building owned by a nonprofit art center is used exclusively as an art gallery and performance space. The building is situated in a busy business district, and is open to the public. No work is sold at the space, and artists and performers that use the space must offer a free public lecture about their work. The space is used without charge to the artists once they apply and are accepted to the residency program. Is it exempt?
- Yes. This space is used to promote the art center’s mission: to create opportunities for the general public to access the fine arts. The art center is also a nonprofit, and does not charge for its space. In this scenario, ownership and use of the space are both for charitable purposes.
A small art school purchases a property for use in the indefinite future. Is the space exempt?
- No. The law requires the charitable use of the space to be presently occurring, not at some unknown date.
- Yes. If, in a few years, the school begins to use the building for educational and other purposes, it can receive a property tax exemption. In addition, the school can apply to get a retroactive refund for all prior years it paid property taxes on the space. Why? Because now the space is being used to advance the school’s charitable and educational mission.
In simple terms, the space must be in use in order to meet the qualifications for the exemption. The organization cannot receive an exemption for property it’s not using, even if the organization owns the space.
Scenario D
An individual buys a small commercial building and forms a nonprofit, which owns the building. The nonprofit offers art classes to the public, and follows a sliding-scale fee system for those unable to pay full price. A certain number of slots are always open for senior citizens, and the organization rents studio space to emerging artists. The building houses a nonprofit gallery, and offers free concerts and lectures to the public.
- Yes. The space's primary purpose is to hold educational arts classes for the general public. Free services and a sliding-scale fee system also make this program eligible for the exemption.
- No. If both ownership and use of the space are not charitable.
A performance artist coalition decides to offer a number of free public education events and free lectures each month. The group will continue to offer their regular club activities, which focus primarily on professional development workshops, guest speakers and participation in exclusive events and activities. The workshops and a majority of the exclusive events and activities are for coalition members only.
- No. The law states that the primary purpose of the organization that owns the building must be for the pursuit of charitable and/or educational acts. In this case, the charitable and/or educational acts are secondary to the organization's purpose, which is to support the professional development of its fee-paying members.
- Yes. If the advantages of membership are minimal, and services provided by the organization mostly benefit the general public. While a museum’s membership program might offer its members discounts and other benefits, the vast majority of the museum's offerings are available to the general public.