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Board of Tax Appeals Relaxes Life Care Requirement

04.27.20 written by

Under prior Ohio law, a “home for the aged” did not qualify for tax exemption if it simply possessed the contractual right to remove a resident for non-payment. However, the Board of Tax Appeals recently reversed course, holding that a “home for the aged” may qualify for tax exemption if it never exercised the right to remove a resident for non-payment. This change in the law was a departure from long-standing precedent, but better adheres to the spirit of the governing statute. Ultimately, this development may permit additional homes for the aged to obtain tax exempt status, or otherwise avoid the forfeiture of current tax exemptions.

In particular, the Supreme Court of Ohio previously held that Ohio Revised Code § 5709.121 does not declare any property exempt, but instead constitutes a refinement of Ohio Revised Code § 5709.12(B) and links certain property uses to the charitable use exemption available under ORC § 5709.12(B). Revised Code § 5709.12 provides, “Real and tangible personal property belonging to institutions that [are] used exclusively for charitable purposes shall be exempt from taxation.” To be entitled to the exemption under this Section, the property must be owned by an institution, and the institution must use the property exclusively for charitable purposes. Similarly, Ohio Revised Code § 5709.121 provides that, “While not itself granting an exemption,” property owned by a charitable, educational, or public entity used exclusively for a purpose as defined by that Section, is to be considered as property used for a charitable purpose.

Revised Code § 5709.12(B) provides, “all real property owned and used for a non-profit organization exclusively for a home for the aged, as defined in Section 5701.13 of the Revised Code,” shall be exempt from taxation. (Emphasis added.) In turn, Ohio Revised Code § 5701.13(B)(1) defines a “home for the aged” in part as a licensed nursing home, residential care facility, or residential facility that “provides services for the life of each resident without regard to the resident’s ability to continue paying for the full cost of the services.” This requirement has become known as the “lifecare” requirement.

The Supreme Court of Ohio reviewed the life care requirement on several occasions, finding that if a home for the aged reserves “the right to terminate the residency of an individual [the facility] does not comply with Ohio Revised Code §5701.13(D). Although there was testimony of [the facility’s] policy to provide hardship discounts to residents, the mere possession of the right to terminate an occupancy [for nonpayment] violates the statute whether it is exercised or not.” Ohio Presbyterian Homes v. Kinney, 9 Ohio St. 3d 90, 94, 459 N.E.2d 500, 503 (1984); Toledo Jewish Home for the Aged, Inc. v. Limbach, 53 Ohio St. 3d 52, 54, 559 N.E.2d 451, 453 (1990).

However, on January 7, 2020, the Board of Tax Appeals reversed course and concluded that the mere inclusion of the right to discharge a resident for non-payment did not run afoul of the life care requirement. Specifically, the BTA held:

Our review of the governing cases leads us to find the Sisters qualify for the exemption because we find the disputed clause was both unintended and benign. The circumstances surrounding the termination clause, in this case, are meaningfully different from Presbyterian Homes. In that case, the clause appears to have been intentionally placed in the contract and the residents were under a legitimate threat of removal for failure to pay. Here, the Sisters have clearly proved there was absolutely no threat. Not only did the Sisters never consider removing a resident, but such removal would also likely have run afoul of their vows. Because we are required to consider the totality of the circumstances and because terms of a contract cannot be considered in a vacuum, we find there was no possibility that a client would be terminated under the former agreement. Accordingly, we find the Sisters’ satisfied the life care requirement, and the Village is entitled to the exemption for 2016 for parcel 50—052—0—007.0B-0, located in Mahoning County. 

ANTONINE MARONITE SISTERS OF YOUNGSTOWN, INC., (ET. AL.), APPELLANT(S) v. JEFFREY A. MCCLAIN, TAX COMMISSIONER OF OHIO, (ET.AL.), APPELLEE(S), 2020 WL 122751, at *3. As a result of the BTA’s decision, the mere possession of the right to terminate an agreement for non-payment does not vitiate the life care requirement. 

If you have any further questions with regards to the above information, or otherwise require assistance with seeking or maintaining tax-exempt status, please contact attorneys Matthew R. Hunt ( or Mathew E. Doney ( 

NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.