Client has an empty house and has considered offering it to a church as a rental for the pastor and taking the value of the rent as a charitable contribution deduction. Can this be done without setting the house up as a rental? It has been sitting empty for a while and he would like to have someone in it rather than it sit empty.
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Circular Money
I'm not going to say it can't be done but it's one of those barter/noncash situations where the income and expense is circular.
To begin with, even if it were deductible as charity, it is Non-Cash and over $500. Since the deduction would be non-cash monetary, would there not also be non-monetary rent? So this arrangement will need to be disclosed for as long as the arrangement exists.
I would just let the pastor move in and not report anything. And even then, I'm afraid there might be reporting requirements, but don't know what they might be.
I dunno - I dunno - I dunno. Dunno much do I? -
Just off the top of my head, it sounds like personal use of the house due to no rent/less than FMV rent. He could deduct his mortgage interest and property taxes as usual on Schedule A. I don't think he can deduct any charitable contribution without giving up his ownership with no strings attached to the church. But, if I had that client, I'd be researching.... Do you belong to NAEA or NATP or an organization that will provide you cites? Keep checking back here in hopes of someone who can guide you in your research.Comment
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I agree with Lion - no charitable deduction.Originally posted by Justataxguy View Post
This is an example of a gift of a partial interest. §170(f)(3)(A) precludes a deduction as you state the facts. Look at example 1 in Reg. §1.170A-7(d).Comment
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