Renting to a profit-oriented business by a church is categorized as an unrelated business activity, which is not directly aligned with the purpose of the organization’s exempt status. Such activities must be reported on Federal Form 990-T and will be subject to tax. However, certain expenses can be allocated to reduce the income, including utilities, depreciation, and mortgage interest (if applicable), which can be attributed to the portion of space occupied by the tenant.
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Article by Clergy Financial Resources
Photo by Luca Bravo on Unsplash
Can a church rent space to a for profit business?