Welfare Exemption for Low Income Rental Housing and Supplemental Clearance Certificate Requirements for Limited Partnerships
Revenue and Taxation Code section 214, subdivision (g), provides that the welfare exemption is available to property owned and operated by qualifying organizations and used exclusively for low-income rental housing. Property Tax Rule 140, subdivision (b), clarifies that there are three types of qualified claimants under the welfare exemption for this type of property:
- eligible non-profit corporations which meet the requirements of section 214,
- eligible limited liability companies which meet the requirements of section 214, and
- limited partnerships in which the managing general partner is an eligible nonprofit corporation or an eligible limited liability company.
Eligible non-profit corporations and eligible limited liability companies which meet the requirements of section 214 only require an Organizational Clearance Certificate (OCC) before an assessor can grant the welfare exemption on its property. There is no limit on the amount of assessed value that can be exempted under the welfare exemption to a nonprofit corporation of eligible limited liability company for low-income rental housing except where the property doesn't receive low-income housing tax credits or government financing. Absent government financing or low-income housing tax credits, there is a statewide limit of exemption to a nonprofit corporation or eligible limited liability company of $20,000,000 in assessed value. For additional details see our Organizational Clearance Certificate filing requirements page.
In the case of a limited partnership, in addition to its managing general partner having an OCC, the limited partnership must have a Supplemental Clearance Certificate (SCC) before an Assessor can grant the welfare exemption on the limited partnership's property.
Low-income rental housing properties owned by a limited partnerships where the managing general partner is an eligible nonprofit corporation or an eligible limited liability company must have government financing or low-income housing tax credits to qualify for the welfare exemption. Limited Partnerships can file for and obtain a Supplemental Clearance Certificate for each low-income housing property in order for those properties to be eligible to receive the welfare exemption. The Supplemental Clearance Certificate requirements are summarized below:
- Complete and mail with wet signature, BOE-277-L1, Claim for Supplemental Clearance Certificate for Limited Partnership, Low-Income Housing Property – Welfare Exemption, to the Board of Equalization at the address listed on the form along with required documentation (see checklist on page 1 of claim form). The claim form must be signed by the managing general partner and all current general partners.
- Copy of a recorded deed restriction or a copy of a regulatory agreement with a public agency that verifies that the property receives either government financing or low-income housing tax credits, as required by section 214, subd. (g)(1)(A);(g)(1)(B)
- Copy of the grant deed, or if the land is not owned by the limited partnership, documents evidencing the limited partnership's ownership of the improvements
- Copy of all formative documents filed and endorsed by a Secretary of State's office such as form LP-1, Certificate of Limited Partnership, and if applicable, Secretary of State form LP-2, Amendment to Certificate of Limited Partnership
Consistent with the Board of Equalization's (BOE) role under the co-administration with the County Assessors, the BOE staff will determine whether the managing general partner is a qualifying nonprofit corporation or eligible limited liability company. In addition, BOE staff will review the documents to determine if the managing general partner has sufficient management authority and duties to qualify for exemption.
Upon review of an application for SCC, BOE staff will issue a finding on form BOE-277-SF, Supplemental Clearance Certificate Finding Sheet for Limited Partnership Low-Income Housing Property Welfare Exemption, to notify the claimant of its eligibility for exemption. Once granted, a Supplemental Clearance Certificate shall remain valid until the BOE staff determines that the property no longer meets the organizational requirements of section 214, subdivision (g) and Property Tax Rules 140.1 and 140.2.
Low-Income Rental Housing Property Tax Rules and Additional Resources
- Rule 140, Welfare Exemption Requirements for Low-Income Housing Properties
- Rule 140.1, Requirements for Managing General Partner of Limited Partnership for Welfare Exemption for Low-Income Housing Properties
- Rule 140.2, Requirements for Supplemental Clearance Certificate for Limited Partnership for Welfare Exemption for Low-Income Housing Properties
- Use Requirements and Welfare Exemption Claim Forms (filed with Assessor)
- Welfare or Veterans' Organization Exemptions Denial by the County Assessor