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Question for lawyers, tax accountants of the mighty OT.
Posted on 6/6/14 at 10:45 pm
Posted on 6/6/14 at 10:45 pm
I know that churches are exempt from property taxes, however my question is........ If a church owns several houses that it rents to the general public for profit, i.e., no subsidized housing, hardship cases, unwed mothers, etc., would these properties continue to be exempt from state and local property taxation?
Thanks for reading and for the record this is in Alabama.
Thanks for reading and for the record this is in Alabama.
Posted on 6/6/14 at 11:15 pm to Robo
If the church rents the houses for profit it can afford to pay for its own legal advice. No freebies.
Posted on 6/7/14 at 8:31 am to Robo
Property tax rules vary widely from state to state, even city to city.
I will say that pretty much everywhere, the actual sanctuary is exempt from property tax. Beyond that, it varies wildly.
Just bear in mind that it's the "seperation of church and state" rules that often are invoked in granting exemptions to church property.
I will say that pretty much everywhere, the actual sanctuary is exempt from property tax. Beyond that, it varies wildly.
Just bear in mind that it's the "seperation of church and state" rules that often are invoked in granting exemptions to church property.
Posted on 6/7/14 at 8:40 am to Robo
From what I've seen, yes they can.
Posted on 6/7/14 at 2:00 pm to Robo
quote:
I know that churches are exempt from property taxes, however my question is........ If a church owns several houses that it rents to the general public for profit, i.e., no subsidized housing, hardship cases, unwed mothers, etc., would these properties continue to be exempt from state and local property taxation?
I know of a church in Florida that owns land, allowed a strip mall to be built on that land, rents it out, and is exempt from property taxes.
Posted on 6/9/14 at 9:35 am to Robo
quote:
If a church owns several houses that it rents to the general public for profit, i.e., no subsidized housing, hardship cases, unwed mothers, etc., would these properties continue to be exempt from state and local property taxation?
I don't think they should be since they are competing with other owners of rental property who aren't exempt from the taxes. The church probably makes the argument that taking care of these people is within its mission as a not for profit.
I'd think if it went to court, the relevant questions are:
1. How close are the rent to market? Are these people paying $50 or $100/month or are they paying $500/month? How close are the rental rates to market rental rates?
2. What is the purpose of these rentals? Are they short term with occupants participating in rehab programs or job-training type programs? Does the church provide free childcare while parents are in these programs?
I think the treatment should be exempt if the rentals are more a shelter/halfway house; if it a more long term rental with rates comparable to market rents, it should be taxable.
If it really is a for profit venture, they should be paying UBI taxes (unrelated business income taxes for non profits) in their tax return filings and potentially pay state income taxes too.
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