re: Question for lawyers, tax accountants of the mighty OT.

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.