We own property that we allow the church to use. our church pays all expenses. property is not for profit. how do we file the property and deduct interest?

Forum|Forum|6 years ago
June 5, 2019
2 replies
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I own property that we rent at no profit to our church. I am the pastor and we have a pass thru llc that is the owner of the property. I hope this makes sense. The church pays the mortgage and all expenses in association to the church. We only tithe and give offering. We receive no income from church.

TurboTax Home & Biz Windows

Best answer by SusanH

Regrettably, you cannot deduct mortgage interest or other property expenses that you do not pay.

You have what is considered a Not-for-Profit rental. Here are the instructions on how to report it.

To report Not-for-Profit (NFP) income in TurboTax

Click on Federal Taxes
Wages and Income

You may need to click Jump to Full List, Show me everything or I’ll choose what I work on depending upon your situation and the TurboTax version you are using.

Scroll to the very bottom; Less Common Income; Click Show more (if start isn’t displayed)
Click Start across from Miscellaneous Income, 1099-A, 1099-C
Scroll to the Bottom and Click Start across from other reportable income
At the “Other Taxable Income” screen, enter your description – Not for Profit Rental and then amount of income you received. In your case, this is the amount of principal reduction on the mortgage loan during the year.

You can also enter your NFP expenses as part of Miscellaneous Itemized Deductions.

If you choose to enter your NFP expenses:

Go to the Federal Taxes tab
Deductions and Credits
Click “I’ll choose what I work on”
Scroll down to Other Deductions and Credits
Click Other Deductible Expenses Start.
At the “Less Common Expenses” screen, say yes.

On the next screen, you can enter your NFP Rental expenses; these are expenses that you actually paid, not those that were paid by the church.

Some additional information

Your NFP Expenses amount will go to line 23 of your Itemized Deductions Schedule A. If they are more than 2% of your Adjusted Gross Income, they will be included in your Schedule A. If your standard deduction is higher than your Schedule A (Itemized deductions), you will use the standard deduction instead; TurboTax will default to the higher deduction.

Here are the 2015 standard deduction amounts for each filing status:

Single or Married Filing Separate - $6,300
Married Filing Jointly or Qualifying Widow(er) - $12,600
Head of Household - $9,250

SusanHAnswer

Regrettably, you cannot deduct mortgage interest or other property expenses that you do not pay.

You have what is considered a Not-for-Profit rental. Here are the instructions on how to report it.

To report Not-for-Profit (NFP) income in TurboTax

Click on Federal Taxes
Wages and Income

You may need to click Jump to Full List, Show me everything or I’ll choose what I work on depending upon your situation and the TurboTax version you are using.

Scroll to the very bottom; Less Common Income; Click Show more (if start isn’t displayed)
Click Start across from Miscellaneous Income, 1099-A, 1099-C
Scroll to the Bottom and Click Start across from other reportable income
At the “Other Taxable Income” screen, enter your description – Not for Profit Rental and then amount of income you received. In your case, this is the amount of principal reduction on the mortgage loan during the year.

You can also enter your NFP expenses as part of Miscellaneous Itemized Deductions.

If you choose to enter your NFP expenses:

Go to the Federal Taxes tab
Deductions and Credits
Click “I’ll choose what I work on”
Scroll down to Other Deductions and Credits
Click Other Deductible Expenses Start.
At the “Less Common Expenses” screen, say yes.

On the next screen, you can enter your NFP Rental expenses; these are expenses that you actually paid, not those that were paid by the church.

Some additional information

Here are the 2015 standard deduction amounts for each filing status:

Single or Married Filing Separate - $6,300
Married Filing Jointly or Qualifying Widow(er) - $12,600
Head of Household - $9,250

jbemd57Author

So this year, if my wife and I pay the mortgage and condo fees, can we write it off then ?

DianeW777

It depends. If the property is in your name, you would continue to be liable for the property taxes and not the church. The rent you would charge the church is not something we would respond to and would suggest you seek guidance from a professional such as an attorney.

As far as your housing allowance, if you spend the money you receive on housing any money you do spend is not subject to personal income tax even though it is subject to self employment tax (social security and medicare taxes).

When entering your W-2 be sure to follow the instructions below.

the screen 'Let's check for uncommon situations', selected Religious employment > Continue > Select 'Clergy' on 'Let's dig into your religious employment.
Continue to enter Housing allowance and Qualifying expenses (any amount in excess of your costs would be included for personal income tax) > Continue
Select 'Pay self employment tax on my wages and housing allowance' > Continue
Complete the rest of your income, credits and deductions