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Nonprofit Law/Non Profit vs Taxes


Mr Harvey@
I am looking to open a recreational business(pin ball) in a lot that belongs to a non profit organization( Do not knew about it, until l I spoke with them last week).They own 8 acres of land but I only need one to do my project. This organization is concern that since there are non profit   if the rent  part of this land to me they will lost the tax break due to the status of non profit organization. This is locate it in the Atlanta area in Georgia.
Can you give me some advised about it? Please
Thank you

I have in my profile that this free forum is only for general questions about IRS federal exemption issues of 501(c)(3) organizations. I am assuming that the land owner is such an organization.  If such an organization rents out 1/8 (12%) of its land, that action would not affect is 501(c)(3) organization status.

On page 9 of IRS Publication 598 "Tax on Unrelated Business Income of Exempt Organizations" at we see "Rents from real property... are excluded in computing unrelated business taxable income." However, on pages 15-20 as to Unrelated debt-financed
property, we see that, if there has been recently  debt-financing (like a mortgage),  rents are, at least to some extent, unrelated business  taxable income. There are exceptions to that exception
listed below in that IRS publication, for example on page 17, right column,  "If substantially all (85%
or more) of the use of any property is substantially related to an organization's exempt purposes, the property is not treated as debt-financed property."

As for Georgia real property tax exemption that is beyond the scope of this free forum, but you can look at the Georgia code and that will explain exemptions as to the real property taxes.

Harvey Mechanic
Attorney at Law

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather more information.  

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Harvey Mechanic


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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