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Real Estate Tax Exemption Procedures

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

 Property Uses Eligible for Real Estate Tax Exemption

Terms and Conditions

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 Office of Foreign Missions. 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 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 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 receives this information, it will deliver a letter to the relevant local tax authority to authorize an exemption from annual property taxes. OFM 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 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.

 

Bilateral Missions

Exemption from real estate taxes on the basis of a property’s authorized use for diplomatic or consular purposes is available to a foreign mission only with respect to property authorized by OFM for use as:

  1.  the premises of a bilateral diplomatic mission (i.e., chancery or chancery annex) or consular post (i.e., primary office and approved annexes), headed by a career consular officer, that is owned by the respective foreign government or the head of the mission or consular post;
  2. the premises of a consular post, headed by an honorary consular officer, that is owned by the respective foreign government;
  3. the primary residence of the head of a bilateral diplomatic mission or a career head of a consular post, that is owned by the respective foreign government or the head of the mission or consular post;
  4. the primary residence of a member or members of the staff of a bilateral diplomatic mission or career consular post, that is owned by the respective foreign government;
  5. a residence used for temporarily lodging representatives or employees of a government of a state recognized by the United States, who visit the United States for bilateral or multilateral diplomatic or consular purposes, that is owned by the respective foreign government; or
  6. another category of property authorized by OFM.

Property that is owned by a foreign government for the purpose of constructing or renovating facilities and that OFM has authorized for use for any of the purposes described above is also eligible for an exemption from real estate taxes, provided that OFM authorized the acquisition of such property.

Permanent Missions to the United Nations (UN) or Organization of American States (OAS)

Exemption from real estate taxes on the basis of a property’s authorized use for diplomatic purposes is available to a foreign mission only with respect to property authorized by OFM for use as:

  1. the premises of a permanent mission to the UN or OAS, that is owned by the respective foreign government;
  2. the primary residence of a principal representative or resident representative of a permanent mission to the UN or OAS with a rank of ambassador or minister plenipotentiary, that is owned by the respective foreign government;
  3. the primary residence of a member or members of the staff of a permanent mission to the UN or OAS, that is owned by the respective foreign government;
  4. a residence used for temporarily lodging representatives or employees of a government of a state recognized by the United States, who visit the United States for bilateral or multilateral diplomatic or consular purposes, that is owned by the respective foreign government; or
  5. another category of property authorized by OFM.

Property that is owned by a foreign government for the purpose of constructing or renovating facilities and that OFM has authorized for use for any of the purposes described above is also eligible for an exemption from real estate taxes, provided that OFM authorized the acquisition of such property.

 

Following are the current terms and conditions governing the provision of exemptions from real estate taxes to foreign missions and international organizations on the basis of a property’s authorized use for diplomatic or consular purposes or for the official business of an international organization:

  • The determination of a foreign mission or international organization’s entitlement to an exemption from real estate taxes associated with a property of a type described above, on the basis of the property’s authorized use for diplomatic or consular purposes, or for the official business of an international organization, is committed to the sole discretion of the Department of State. Such determinations are communicated by letter from OFM to the relevant state, county, municipal or territorial revenue authorities.
  • All such letters will be signed by the Director of OFM’s Office of Policy and Reciprocity (OFM/PR), or a successor office.
  • Such letters serve as official notice to the relevant state, county, municipality, or territory that the described property or transaction is or is not entitled to an exemption from real estate taxes on the basis of the property’s authorized use for diplomatic or consular purposes or for the official business of an international organization.
  • States, counties, municipalities, and territories are prohibited from extending to a foreign mission or international organization an exemption from real estate taxes associated with a property on the basis of the property’s authorized use for diplomatic or consular purposes or for the official business of the international organization, except on the basis of written authorization from OFM.
  • Conversely, on the basis of a letter as described above, states, counties, municipalities, and territories are required to extend to a foreign mission or international organization an exemption from real estate taxes to which OFM determines a foreign mission or international organization is entitled. If a state, county, municipality or territory has concerns regarding the extension of such exemption benefits, it should raise the matter directly with OFM.
  • Unless otherwise determined by OFM, the effective date of OFM’s authorization of an exemption from real estate taxes is the date the property deed in question is signed or transferred.
  • States, counties, municipalities, and territories may establish additional procedures to ensure the proper extension of such exemption benefits, provided that:
    • such procedures, including the establishment and use of any forms, serve only to facilitate the state, county, municipality, or territory’s extension of exemption benefits to a foreign mission or international organization and not as a means to determine the foreign mission’s or international organization’s entitlement to the exemption benefit associated with a property on the basis of the property’s authorized use for diplomatic or consular purposes or for the official business of the international organization, which determination is committed to the sole discretion of the Department of State; and
    • the state, county, municipality, or territory obtain written approval from the Director of OFM confirming that the proposed procedural requirements do not violate or infringe on any benefits, privileges, or immunities enjoyed by foreign missions or international organizations.

U.S. Department of State

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