A few weeks ago, former president Donald Trump’s ex-wife Ivana Trump died in her home. She was buried in a discreet area at the Trump National Golf Club in Bedminster, New Jersey.
A golf course seems like an unusual place to be buried even if the scenery is nice and the land is usually well cared for. It turns out that in 2017, the Trump organization submitted a proposal to build a cemetery on part of the golf course grounds.
So why would this golf course have a dual existence as a cemetery? Sociology professor Brooke Harrington has a theory. She thinks Trump is doing this as a scheme to avoid paying taxes on the golf course real estate.
She cites to a publication from the New Jersey Division of Taxation which states that cemetery companies are exempt from the payment of property, income, and sales taxes. This could lead to what she calls a “trifecta of tax avoidance.”
However, a publication is not the same as the New Jersey tax code. Several sections of the New Jersey Revised Statutes address taxation of cemeteries.
New Jersey law states that land designated solely for use as a cemetery is tax exempt.
To operate as a cemetery company in New Jersey, it must be a nonprofit company. This does not necessarily mean that the company cannot earn a profit. It means that the company must abide by the state’s nonprofit company laws. Also, the company’s business charter or certificate of incorporation must specifically state that the purpose of the company is for the procuring and preservation of lands to be used exclusively as a cemetery or the disposition of human remains.
This means that the company that owns and operates the Trump National Golf Club in Bedminster cannot be a cemetery company since they operate a for-profit golf course. So the entirety of the golf course is not exempt from property taxes.
One possible workaround would be to set up a nonprofit entity with the purpose of operating as a cemetery. This nonprofit would then manage the designated areas of the golf course specifically for cemetery purposes. The land would be exempt from property taxes and the cemetery company managing the land would be exempt from state income and sales taxes. While this won’t shelter all of the land from property taxes, it can shelter some of it.
This could possibly work if done on a very small scale on land specifically designated for cemetery use. There could be people who are willing to pay what is assumed to be a large fee to be buried at a golf course. Annual maintenance costs will likely be negligible.
But if done in a larger scale, the less likely it will work as a tax savings device and may even cost business. Excessive grave markers on course grounds would likely scare away some golfers and those who would rent the course grounds for other events like weddings. Even tax authorities would question whether the land was used solely for cemetery purposes. For example, in the 2021 version of the New Jersey Assessor’s Handbook, in determining whether a piece of land is used as a cemetery, assessors are advised that “The land used or dedicated to cemetery purposes is a question of fact in each case where proof plainly indicates that the property is actually used as a cemetery or within reasonable contemplation thereof.”
Also, some of the golf course land is already subject to lower property tax. New Jersey law gives lower property tax rates to lands that have been converted into farmland. The golf course has converted some of the property to farmland which includes raising goats, farming hay, and wood cutting. Converting this land into a cemetery may not result in much tax savings.
Finally, if this loophole is so good, why aren’t other golf courses in New Jersey (or in states with similar laws) taking advantage of this?
We’ll probably never know if there is a sinister motive behind setting up a cemetery on golf course grounds and why Ivana Trump is buried in one. Maybe the Trump Organization just wants to bury family members there or sell an eternal membership to very motivated members. But the theory that it is a tax-avoidance scheme seems farfetched. There is more to being a cemetery company than just operating land dedicated to the deceased. And it seems like it would not work on a large scale and would make little business sense.
Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at firstname.lastname@example.org. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.
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