Under which condition is government-owned property taxed?

• A. It is never taxed
• B. It is always taxed
• C. It is taxed when used for private events
• D. It is taxed when the property is leased to a private business

Answer: (D)

The key idea is that government-owned property is generally exempt from property taxes, because the property serves government functions. Tax status changes when private use intrudes on that property. If the government leases the property to a private business, a portion of the property is being used for private purposes rather than for government operations. In that case, the private use is no longer covered by the government exemption, and the property (or the leasehold interest) becomes taxable. So the condition that makes government-owned property taxable is when it is leased to a private business.