Jump directly to the content
If an Outside Group Uses Our Building, Will that Jeopardize Our Property Tax Exemption?
If an Outside Group Uses Our Building, Will that Jeopardize Our Property Tax Exemption?
Seven questions to help understand the potential implications of these arrangements.

Our church allows a homeschooling organization to meet in our facility one day per week during the school year. In return, the group makes a donation to the church to help us cover the costs of electricity and water. I recently heard that such an arrangement puts our church’s property tax exemption in jeopardy. Is this true?

First, classifying such payments as a “donation” does not necessarily resolve the question, since the Internal Revenue Service (IRS) may conclude that the “donation” is actually rent paid to the church for the use of its facilities. The IRS often says that it is the “economic reality” that controls, not terminology.

Second, whenever a church is considering the rental of some or all of its facilities, there are a number of factors to be considered. Your question is actually one of seven questions that merit attention by your church leaders when weighing arrangements like this one:

Log In For Full Access

Interested in becoming a member? Learn more.

Posted:
June 3, 2019
View All
from our store
Church Finance

Church Finance

Learn about budgeting, financial reporting, tax compliance, insurance coverage, and more.
2019 Church & Clergy Tax Guide

2019 Church & Clergy Tax Guide

Find comprehensive help understanding United States tax laws as they relate to pastors and churches.
Church Issues: Same-Sex Marriage and Gender Identity

Church Issues: Same-Sex Marriage and Gender Identity

Richard Hammar combines research and analysis to take you through a step-by-step process regarding public accommodations laws.
Politics and the Church

Politics and the Church

Tax and legal guidelines faith-based organizations need to know before jumping into the political fray.

ChurchSalary

ChurchSalary

Experience a whole new way to set compensation. Eliminate the guesswork – get access to detailed compensation reports in just minutes.