USA 501c3 church rental property


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Hello,

Our church owns a house that is adjacent to, but not on our church property. We are a debt-free church, and the property is mortgage-free.

Are we allowed to rent that house out? If so, will we be subject to the unrelated business tax on that income? (Renting it privately is our preferred scenario.)

Alternatively, can we use it for staff housing? If so, does that person have to claim the Fair Market Value as income or can it be given at a reduced rate? (I've read that as long as we dont advertise the rental, we can use it for benevolent reasons in that way (i.e. for someone who can't afford the rent) without being restricted on our selection process.

TIA!
 

kirby

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You can rent the house. The rent will be subject to unrelated business tax in the income.
Second question will depend on "facts and circumstances". How was person selected (best friend of someone?) What is that person's "staff" function? (full time or 1 hour a month?) and on and on. So you will need to define these to a full-on tax preparer who can help on this.
 
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Thank you, I'll recommend we sit down with a local CPA for more information.

You can rent the house. The rent will be subject to unrelated business tax in the income.
Second question will depend on "facts and circumstances". How was person selected (best friend of someone?) What is that person's "staff" function? (full time or 1 hour a month?) and on and on. So you will need to define these to a full-on tax preparer who can help on this.
 
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kirby

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I missed that there is no debt on property. So no FED tax on the rental. Depending on your state there may be a state tax on the rental.
 

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