August 15, 2013
Q&A: Outside Groups and the Church Building
Potential tax pitfalls can trip up a seemingly straightforward arrangement.
Q: We have several groups that call and ask to use the church building for meetings. If we set a price for rental, is that taxable income? If we suggest a donation or just ask for a tithe off their offering, does that affect our tax status? Also, what are things that we need to be careful with in having other groups use the building?
A: The payments may or may not be taxable depending on the detailed facts of the arrangement. You should check with a competent tax adviser. Also, do not forget to check on the property tax implications. Any use by an outside group can cost the property tax exemption in many states.
To your last question, you should require a written lease agreement for all outside groups.
Take a quiz for help in determining if your church is prepared to share its property. To learn more, Managing Church Facility Use offers guidance in developing policies and procedures that make facilities available for additional use, and yet keep all of its assets protected.