Real Estate Tax Exemption Procedures
Real estate taxes refer to taxes associated with the purchase, ownership, and disposition of real property, other than such as represent payment for specific services rendered, including, but not limited to, annual property tax, recordation tax, transfer tax, and the functional equivalent of deed registration charges and stamp duties. For these purposes, real estate taxes do not include those that represent charges for specific services rendered, such as water and sewer usage or trash collection services. Furthermore, property lessees are not entitled to an exemption of real estate taxes on such property because such taxes are payable under state and local law by the property owner.
Procedures for Requesting Real Estate Tax Exemption
State and local tax authorities are prohibited from extending to a foreign mission an exemption from real estate taxes associated with a property on the basis of the property’s authorized use for diplomatic or consular purposes, except on the basis of written authorization from the Director of OFM’s Office of Diplomatic Property, Tax, Services and Benefits (OFM/PTSB). Therefore, foreign missions are requested to comply with the following procedures to facilitate OFM’s authorization of the exemption:
The mission should submit requests to acquire or dispose of real property in the United States in a timely manner. When OFM approves a foreign mission’s request, OFM/PTSB will deliver a letter to the relevant state and/or local tax authority to authorize an exemption from real estate taxes on the transaction (typically, transfer or recordation taxes). OFM/PTSB will also provide a copy of the letter to the embassy and, where applicable, the consular post.
When the foreign mission is purchasing property, the mission must inform OFM of the date the property deed is signed. When OFM/PTSB receives this information, it will deliver a letter to the relevant local tax authority to authorize an exemption from annual property taxes. OFM/PTSB will also provide a copy of the letter to the embassy and, where applicable, the consular post.
In the case of a primary residence owned by the head of a bilateral diplomatic mission or career head of a consular post, missions must annually request in writing OFM’s authorization of an exemption from annual property taxes. Upon receiving such request, OFM/PTSB will deliver a letter to the relevant local tax authority to authorize an exemption from annual property taxes for a period of twelve (12) months.