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Let's say I own a home and the mortgage is completely paid off. I was reading the nonprofits do not have to pay property tax. What if I created a nonprofit with the sole purpose or mission statement of providing a warm place for me to live. That by definition is charitable and non-profit making. it would have an employee of one and the headquarters would be my house.

I'm sure there are holes in this idea but interested to hear if anyone else has ideas on sovereignty? It's kind of ironic that you can pay for an entire house and now you "own it" until you don't pay property tax.

Info from comments:

I was specifically thinking about an old tax law and the exact name is escaping me but I thought I had the word sovereignty in it. It was from the first Continental Congress and it allowed a landowner to file for sovereignty status with the government in exchange for a one-time tax fee

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    If it was that easy, then everyone would have done it. The fact that they haven't is because the IRS isn't as stupid as you think it is. – RonJohn Sep 28 at 0:50
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    And thumbs down for bringing "sovereignty" into it. – RonJohn Sep 28 at 0:51
  • I just looked up sovereign citizens and that was not what I was talking about when I used the word sovereignty. I'm simply talking about property rights and whether a nonprofit status at that property would provide benefits. I was specifically thinking about an old tax law and the exact name is escaping me but I thought I had the word sovereignty in it. It was from the first Continental Congress and it allowed a landowner to file for sovereignty status with the government in exchange for a one-time tax fee. – Lijo Sep 28 at 1:39
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    This question is on-topic, being about tax strategy. And the answer explains why it is a losing strategy. There is no need to close it. – Ben Miller - Reinstate Monica Sep 28 at 4:32
  • @Lijo "allowed a landowner to file for sovereignty status with the government in exchange for a one-time tax fee" certainly has nothing to do with creating a non-profit to avoid property taxes. – RonJohn Sep 28 at 9:17
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No, because there is a principle called inurement: https://www.irs.gov/charities-non-profits/charitable-organizations/inurement-private-benefit-charitable-organizations

"A section 501(c)(3) organization must not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. No part of the net earnings of a section 501(c)(3) organization may inure to the benefit of any private shareholder or individual. A private shareholder or individual is a person having a personal and private interest in the activities of the organization."

So you can file to have a non-profit, and then the process of using the organization for your own benefit means the IRS will revoke your status thanks to the inurement prohibition. You'll then also be on the hook for penalties, back taxes with interest, and if the amount is large enough, criminal tax evasion.

Yes, sadly, the existence of property taxes does mean that ownership is always limited - anything you can have the government can take by force if you don't pay all the ongoing protection money required, and there is no way to opt out. It is just the way of things - we are all just renting even our own teeth, in the grand scheme of things. :)

Property rights exist, but most be understood to be limited in scope and duration as a matter of practical reality.

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    There are arguments for and against property taxes but that would be out of scope. I think this answer would be better without the political slant. – jcm Sep 28 at 3:35
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    The principle you are getting at is correct, but IRS rules have nothing to do with property taxes. Property taxes in the US are a local matter typically at the school district or county level, with no connection to the IRS. Each state will have there own rules regulating non-profits and they will have a rule eliminating self-dealing or self-benefitting non-profits. – Charles E. Grant Sep 28 at 6:25
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State and local governments decide what land is exempt from taxes. If you can meet there definitions you will not have to pay taxes. You have to start with the state and local government.

Sometimes the exemption is based on who owns it such as specific organization; or how it is used such as a park or to generate solar power; or how it isn't used if you give up development rights. In many cases they exempt land owned by 100% disabled veterans, or the family of military or first responders killed in the line of duty. In some cases you can donate the property to an exempt organization, but retain the right to live on the land.

If you think one of these applies, then you should be able to find a local attorney to draw up the paperwork.

The state and federal government define what is a non-profit, and what is a charity. They look out for self dealing. But not all non-profits and charities will automatically be exempted from state and local property taxes.

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