If an exempt property is leased to a non-exempt individual, how is the property assessed?

When an exempt property is leased to a non-exempt individual, the key factor to consider is the change in use of the property due to the lease. The correct understanding is that when the property is leased, it effectively changes its status from exempt to taxable as of the effective lease date.

This shift occurs because the use of the property is no longer exclusively for the exempt purpose; instead, it is now generating income through a lease to a non-exempt entity or individual. In New Jersey, properties that are exempt from taxation generally do not contribute to the tax rolls, but leasing to a non-exempt party creates a taxable use of the property, compelling assessors to assess it as if it were subject to property taxes.

The other response options do not accurately reflect the nature of property assessment in this scenario. Options that suggest the property remains exempt or is assessed at a reduced rate do not take into account the income-producing activity that comes from leasing the property. Furthermore, the idea that the property is only assessed if the lessee does not use it contradicts the principle that any active use by a non-exempt party prompts taxation. Thus, the property's taxation status must align with its use as dictated by the lease agreement.