Appeals court denies tax exemption of church retreat property

A panel of appeals court judges in Michigan ruled Monday that the Woodside Bible Church in Troy, Mich., must pay taxes on a retreat property owned by the church. The judge’s ruling upheld a previous tax tribunal ruling that held that the property did not qualify for a tax exemption because its use failed to meet exemption code requirements. Woodside purchased “The Lodge” about two hours north in 2016 for the purpose of equipping pastors and their spouses, enriching marriages, and multiplying local church leaders, according to the church.

The property received tax exemption from 2017 through 2020 and was assessed at a value of over $1.1 million by 2021, according to court documents. That year assessors redesignated the property as residential rather than exempt citing the property’s use as a wedding venue. The church denied that the property hosted weddings, but did not submit evidence proving its claim.

How can a church-owned property not qualify for exemption? A property’s use, not ownership, determines whether it may receive a religious tax exemption, according to the appeals court decision. Both rulings held that the church did not meet the legal standard for receiving the exemption by proving the lodge was used mainly for religious purposes. The evidence submitted showed that the property was predominately used by third parties, not the church, for recreational and other nonreligious purposes, the panel said. The church’s brochure about the lodge never referenced religious services, worship, or teaching of any kind, its ruling added. The appeals panel likened the church’s brochure about the retreat property to one for a secular hotel or vacation destination.

After the tax tribunal’s 2021 assessment removed the exempt status, Woodside decided to donate the property to a pastor mentorship ministry, Barnabas Ministries. This shift will allow the lodge to better achieve its original goal of providing rest to pastors and retreat groups, the church said in a February statement. Leaders are confident that God will work through this transition to bless the lives of many at Woodside and beyond, the church concluded. WORLD reached out to Woodside for a comment on the appeals court’s ruling but did not receive an immediate response Wednesday afternoon.