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heathersinn22
New Member

Can I deduct rent I pay for a 501c3 charity

I am the founder and president of a 501c3 charity that is an animal rescue. I live on the property where the animals are housed and cared for. I pay the rent for this property monthly via my personal bank account. Can I deduct this as a donation on my personal taxes or do I need to donate the money for the rent expense to the rescue and then write a check for the rent from the rescue bank account to be able to use it as a deduction on my personal taxes? And if so, am I allowed to deduct the full amount of the monthly rent or only a portion? This property is set up for and devoted to the care of the animal residents with a small living space for myself.

1 Best answer

Accepted Solutions
Opus 17
Level 15

Can I deduct rent I pay for a 501c3 charity

You've got some issues that probably need a professional review.

You can't take a personal tax deduction for partial use of property (in this case, partial use by the charity of a property rented in your name and where you live.)

You can take a tax deduction for money donated to the charity, however when you are the founder and controller of the charity you have to be very aware of the problems created by self-dealing.  You can easily get into a situation where the charity is, or is perceived to be, providing personal benefits to you that are impermissible.  In this case, if you donated money to the charity and the charity was the leaseholder and paid the rent, you end up taking a tax deduction for your personal shelter, which is not allowed.  

(Stepping back, let's think about a larger charity that rented the land and you happen to be a volunteer care giver not involved with running the charity.  If the charity allows you to live on the land rent-free in return for caring for the animals, the value of the rent of your living quarters would be considered taxable income to you.)

If you have an independent board that can review the arrangement, that would help. Then potentially the charity could rent the land and give you a 1099-MISC for taxable income for the service you provide to the animals.  Any money you donated to the charity would go into their general fund to be used for any purpose, including but not limited to paying the rent on the land.  But the board would have to have the authority to decide (for example) that there was a better piece of land down the road and rent it instead.

This is a situation where professional advice would be strongly recommended.  If I recall correctly, a former congressperson just went to jail over a self-dealing charity matter.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

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3 Replies
Opus 17
Level 15

Can I deduct rent I pay for a 501c3 charity

You've got some issues that probably need a professional review.

You can't take a personal tax deduction for partial use of property (in this case, partial use by the charity of a property rented in your name and where you live.)

You can take a tax deduction for money donated to the charity, however when you are the founder and controller of the charity you have to be very aware of the problems created by self-dealing.  You can easily get into a situation where the charity is, or is perceived to be, providing personal benefits to you that are impermissible.  In this case, if you donated money to the charity and the charity was the leaseholder and paid the rent, you end up taking a tax deduction for your personal shelter, which is not allowed.  

(Stepping back, let's think about a larger charity that rented the land and you happen to be a volunteer care giver not involved with running the charity.  If the charity allows you to live on the land rent-free in return for caring for the animals, the value of the rent of your living quarters would be considered taxable income to you.)

If you have an independent board that can review the arrangement, that would help. Then potentially the charity could rent the land and give you a 1099-MISC for taxable income for the service you provide to the animals.  Any money you donated to the charity would go into their general fund to be used for any purpose, including but not limited to paying the rent on the land.  But the board would have to have the authority to decide (for example) that there was a better piece of land down the road and rent it instead.

This is a situation where professional advice would be strongly recommended.  If I recall correctly, a former congressperson just went to jail over a self-dealing charity matter.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

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heathersinn22
New Member

Can I deduct rent I pay for a 501c3 charity

Thank you very much I have been hitting nothing but walls dealing with the IRS via phone.
Opus 17
Level 15

Can I deduct rent I pay for a 501c3 charity

I wouldn't trust tax advice from an IRS phone agent even if can get through.  You may want to talk to a cpa or enrolled agent with expertise in non-profits.
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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