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Q&A: Rental of Church Facilities

Does charging money for ministry space threaten our tax exempt status?

My wife has worked for a church-run preschool for 10 years. The church was going to close the program when the program director retired. My wife and another teacher asked the church if they could take over the program and make it private. The church said "yes," and my wife formed an LLC. The church, which is separate from the preschool building, has allowed them to use the old school building, which is less than 1000 sq. ft in size. They are paying the church $140 per month for rent and water bill. All other utilities and expenses are paid by the LLC. There are a few members of the church who are now concerned that this could affect the church's tax exempt status. Does this affect the churches tax exempt status since it is a nonprofit church collecting rent from a for profit business?

In any instance where a church rents or leases its facilities to a for profit entity careful ...

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Posted:
  • November 10, 2009

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