In Michigan, a common misconception occurs when 501(c)(3) nonprofit corporations buy and sell real property.  While nonprofit 501(c)(3) corporations can be exempt from paying real property taxes while retaining title to and occupying real property in Michigan, they can be subject to a real property transfer tax at the time title to its property is transferred.  It is customary for a seller (or transferor) of real property to pay the transfer taxes at the time of transfer, but this tax can be negotiated as part of the transaction.

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In 2010, a number of decisions were handed down by state courts reviewing property tax exemptions for hospitals and healthcare providers.  Out of those decisions, the opinion by the Illinois Supreme Court in Provena Covenant Medical Center v. The Department of Revenue deserves special attention. In its opinion, the Illinois Supreme Court reviewed the facts surrounding a property tax exemption valued at $ 1.1 million sought by Provena Covenant Medical Center (“Provena”) for its real estate located in Urbana, Illinois. (more…)