House File 2059 - Introduced HOUSE FILE 2059 BY GUSTOFF , SHIPLEY , DIEKEN , KNIFF MCCULLA , GEHLBACH , BODEN , ANDREWS , and THOMSON A BILL FOR An Act relating to the tax exemption of religious institution 1 or society property being used for educational purposes by 2 a third party, and including effective date and retroactive 3 applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5061YH (6) 90 dg/jh

H.F. 2059 Section 1. Section 427.1, subsection 8, paragraph a, Code 1 2024, is amended to read as follows: 2 a. All grounds and buildings used or under construction by 3 literary, scientific, charitable, benevolent, agricultural, 4 and religious institutions and societies solely for their 5 appropriate objects, not exceeding three hundred twenty 6 acres in extent and not leased or otherwise used or under 7 construction with a view to pecuniary profit. However, 8 an organization mentioned in this subsection whose primary 9 objective is to preserve land in its natural state may own or 10 lease land not exceeding three hundred twenty acres in each 11 county for its appropriate objects. For assessment years 12 beginning on or after January 1, 2016, the The exemption 13 granted by this subsection shall also apply to grounds any of 14 the following: 15 (1) Grounds owned by a religious institution or society, not 16 exceeding a total of fifty acres, if all monetary and in-kind 17 profits of the religious institution or society resulting 18 from use or lease of the grounds are used exclusively by the 19 religious institution or society for the appropriate objects 20 of the institution or society. 21 (2) Grounds owned by a religious institution or society 22 used by a person or entity, regardless of whether the religious 23 institution or society has a lease agreement with the person or 24 entity, if all of the following apply: 25 (a) The grounds are being used by the person or entity for 26 the primary purpose of providing educational instruction to 27 children. 28 (b) The person or entity’s educational instruction includes 29 religious instruction consistent with the doctrines of the 30 religious institution or society that owns the grounds. 31 (c) (i) The person or entity using the grounds is not 32 required to make rental payments to the religious institution 33 or society that owns the grounds. 34 (ii) For the purposes of this subparagraph division, a 35 -1- LSB 5061YH (6) 90 dg/jh 1/ 3

H.F. 2059 payment from the person or entity using the grounds to the 1 religious institution or society that owns the grounds as 2 reimbursement for janitorial services, utilities, or other 3 similar reimbursement payments shall not be considered a rental 4 payment. 5 Sec. 2. EFFECTIVE DATE. This Act, being deemed of immediate 6 importance, takes effect upon enactment. 7 Sec. 3. RETROACTIVE APPLICABILITY. This Act applies 8 retroactively to assessment years beginning on or after January 9 1, 2024. 10 EXPLANATION 11 The inclusion of this explanation does not constitute agreement with 12 the explanation’s substance by the members of the general assembly. 13 This bill relates to the tax exemption of religious 14 institution or society property being used for educational 15 purposes by a third party. 16 The bill allows grounds owned by a religious institution or 17 society and used by a person or entity, regardless of whether 18 the religious institution or society has a lease agreement 19 with the person or entity, to retain tax-exempt status if the 20 grounds are being used by the person or entity for the primary 21 purpose of providing educational instruction to children, 22 the person or entity providing educational services includes 23 in its instruction religious instruction consistent with the 24 doctrines of the religious institution or society, and the 25 person or entity using the grounds is not required to make 26 rental payments to the religious institution or society. 27 For the purposes of determining the tax-exempt status of 28 a property belonging to a religious institution or society, 29 a payment from the person or entity using the grounds to the 30 religious institution or society that owns the grounds as 31 reimbursement for janitorial services, utilities, or other 32 similar reimbursement will not be considered a rental payment. 33 The bill is effective upon enactment and retroactively 34 applies to assessment years beginning on or after January 1, 35 -2- LSB 5061YH (6) 90 dg/jh 2/ 3