Use of a Church Building


J

Jerry Buchanan

I am the treasurer of a small church. A person has asked me
if she can use our facility for her tutoring service, for
which she would pay a small amount per month. The church is
a non-profit corporation, the tutoring service is not. The
woman is neither a member nor an employee of the church. Can
anyone tell me if there is some tax law that either
restricts (or allows) the use of a non-profit's building for
a for-profit endeavor?

On the state level: the building and grounds are tax-exempt
for property tax consideration. Could the State (Oregon)
have additional rules restricting/allowing this activity?

IF -- this activity is allowable, then would either side
1099 the other?

Thank you very much!!
 
Ad

Advertisements

I

IraS1

On the state level: the building and grounds are tax-exempt
for property tax consideration. Could the State (Oregon)
have additional rules restricting/allowing this activity?
In NJ, renting space in a church to a "for-profit" organization
is grounds for losing the real estate tax exemption.

Ira Smilovitz
 
A

Avrum Lapin

Jerry Buchanan said:
I am the treasurer of a small church. A person has asked me
if she can use our facility for her tutoring service, for
which she would pay a small amount per month. The church is
a non-profit corporation, the tutoring service is not. The
woman is neither a member nor an employee of the church. Can
anyone tell me if there is some tax law that either
restricts (or allows) the use of a non-profit's building for
a for-profit endeavor?

On the state level: the building and grounds are tax-exempt
for property tax consideration. Could the State (Oregon)
have additional rules restricting/allowing this activity?

IF -- this activity is allowable, then would either side
1099 the other?
In California you would lose some of your property tax exemption.
It would depend on the square footage used by the tutoring service.
I am not sure how this is actually calculated

I don't think that there is a restriction at the federal level
 
D

Dick Adams

Jerry Buchanan said:
I am the treasurer of a small church. A person has asked me
if she can use our facility for her tutoring service, for
which she would pay a small amount per month. The church is
a non-profit corporation, the tutoring service is not. The
woman is neither a member nor an employee of the church. Can
anyone tell me if there is some tax law that either
restricts (or allows) the use of a non-profit's building for
a for-profit endeavor?
What if the church sponsor's the tutoring service and 1099's
all but the rent to the tutor? Education is an appropriate
not-for-profit endeavor.

Remember: Not-for-profit does not preclude making a profit.
It means the earnings are not distributed to sharholders.
 
B

Barry Margolin

Jerry Buchanan said:
I am the treasurer of a small church. A person has asked me
if she can use our facility for her tutoring service, for
which she would pay a small amount per month. The church is
a non-profit corporation, the tutoring service is not. The
woman is neither a member nor an employee of the church. Can
anyone tell me if there is some tax law that either
restricts (or allows) the use of a non-profit's building for
a for-profit endeavor?
There's a local bridge club that rents space in a church for
their games, so it doesn't seem like there's a federal or
Massachusetts law prohibiting it.
 
Ad

Advertisements

J

John R. Levine

I am the treasurer of a small church. A person has asked me if she
can use our facility for her tutoring service, for which she would
pay a small amount per month. The church is a non-profit
corporation, the tutoring service is not. The woman is neither a
member nor an employee of the church. Can anyone tell me if there is
some tax law that either restricts (or allows) the use of a
non-profit's building for a for-profit endeavor?
It varies from state to state, but the general rule is that
incidental use doesn't affect exempt status, dedicated use does.
For example, in our church in NY, local music teachers rent
classrooms in our church/school building by the hour during the
week for lessons which doesn't affect its exempt status, but in
another two-floor building, we use the upper floor for church
purposes and rent the lower floor to a commercial tenant (or
would if we could find one) so half of that building is on the
tax rolls and the net rental income after deducting heat, taxes,
etc. would be taxable.
On the state level: the building and grounds are tax-exempt
for property tax consideration. Could the State (Oregon)
have additional rules restricting/allowing this activity?
Yes. You should really talk to someone familiar with the
relevant Oregon law. Churches are different from other kinds
of non-profits since their exemption comes straight from the
First Amendment rather than from section 501 of the Internal
Revenue Code, so the rules that apply to churches are often
less strict than those that apply to 501 non-profits, and
surprisingly few people really know what the rules are. Try
asking the treasurers or finance chairs of other nearby
churches and see who the local expert is.

Regards,
John Levine, (e-mail address removed), Primary Perpetrator of "The Internet for Dummies",
Information Superhighwayman wanna-be, http://iecc.com/johnl, Sewer Commissioner
"More Wiener schnitzel, please", said Tom, revealingly.
 
Ad

Advertisements


Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top