Tax Court reverses educational property tax exemption

The Indiana Tax Court has reversed an educational property tax exemption for a Carmel day care after finding that the land’s owner failed to properly compare the total time the property was used for educational purposes against the total time the day care utilized the land.

In Hamilton County Assessor v. Charles E. Duke, 49T10-1309-TA-69, Charles Duke incorporated the Little Lamb Daycare, Inc. as a for-profit corporation and opened the day care on his property in Carmel. The daycare used a Bible-based curriculum that instructed children up to 6 years old in various educational subjects, though its lessons were not governed by a specific church or denomination. 

In the 2009, 2010 and 2011 tax years, Duke filed three property tax exemption applications, claiming that because Little Lamb used 84 percent of the property for educational and religious purposes, that portion of his property was entitled to exemption under Indiana Code 6-1.1-10-16 and 6-1.1-10-36.3 After the Hamilton County Property Tax Assessment Board of Appeals denied his request, Duke appealed to the Indiana Board of Tax Review, which denied his partial religious exemption but granted his partial education exemption.

The Hamilton County assessor appealed, arguing that the board erred in granting 84 percent of the property an educational exemption because Duke failed to identify the time spent on specific exempt activities and compare that to the total amount of time the property was used. Duke, however, contended that the board erred in denying his partial religious exemption.

The evidence in the case shows that Little Lamb used the property for both educational and non-educational purposes, Indiana Tax Court Judge Martha Blood Wentworth wrote in a Friday opinion. However, Duke failed to identify how the day care’s activities furthered educational purposes, and also did not compare the amounts of time the property was used for education against the total time it was in use, she wrote. Without that comparison, Wentworth said the board’s determination in Duke’s favor on the issue of the partial education exemption was contrary to law.

Similarly, Wentworth wrote that Duke failed to explain how the day care’s activities furthered religious purposes and also did not provide a comparison of the time spent of religious activities versus the total time the daycare was in use on Duke’s property. Thus, the board was correct to deny Duke’s partial religious exemption, the judge said.