I have a small country church. They have a parsonage house. The current clergy has his own house and wishes to stay there. The church in order to pay the clergy and maintain church expenses wish to rent the house to a third party. Question is, does this income create a tax problem for the church? I was informed that They have never filed any kind of return in the past. Just didn't know what this rental may do to them. My original thought was that since they are using the funds to pay church related expenses and not in the business of renting it would not create a problem. Your thoughts please.