[Finance] Rent as a charitable donation

[Edward L Platt]

Similarly, the value of donated services are not deductible[1].  (If an
accountant tells you they are, run away!)

The logic is that you can only deduct money you've actually spent.  It
actually makes sense if you think about it, because the landlord is getting
an implicit deduction by giving you free rent.  If they were renting to a
for-profit, they would have to pay tax on that income.  Since they don't
have that income, they aren't paying taxes on it.

You could do as Lokkju suggests and write each other checks, but there would
be no tax benefit for the landlord because the additional income would
increase their taxes by the same amount the deduction would decrease it.
 However, such a transaction might be beneficial to the hackerspace for a
few reasons:
* It would increase your "public support" which would help you keep public
charity status
* If you have any grants that match your other contributions, it would make
your other contributions higher.

[1]
http://www.irs.gov/publications/p526/ar02.html#en_US_2010_publink1000229693

Happy hacking,
-Ed
--
Edward L. Platt
i3 Detroit: i3detroit.com
Cell: 248.320.5061




On Tue, Mar 8, 2011 at 11:52 AM, Lokkju Brennr <lokkju at gmail.com> wrote:

> Right - but your landlord can legally make a cash donation to the
> charity for the rent amount each month, that you pay back to them as
> rent, as long as money actually changes hands, correct?  i.e., they
> write you a check for tax-deductible contribution of $1000, you write
> them a check for rent of $1000, etc - or is your landlord prevented
> from making tax-deductible contributions?
>
> Loki
>
> On Tue, Mar 8, 2011 at 8:39 AM, Jeff Cotten <omegix at gmail.com> wrote:
> >
> >
> > Synopsis:  Rent is not a tax-deductible benefit when donated to a 501c3
> > charity.
> >
> > Thank you to MrFranceIsBacon from Makers Local 256 who brought this to
> our
> > attention.
> > One of the ideas that Makers Local (Huntsville, AL) had when we started
> was
> > to attain 501c3 charity status,
> > and then convince local building owners to let us set up there rent-free,
> > while they wrote the Fair Market Value (FMV) off
> > as a charitable donation on their taxes.
> >
> > There are tax laws preventing this, it is considered Partial Interest in
> > Property.
> >
> > Ref:  Page 9, Example 1:  http://www.irs.gov/pub/irs-pdf/p526.pdf
> >
> >
> > I've added an entry on the wiki about this here:
> > http://hackerspaces.org/wiki/Finances#Tax_Laws
> >
> >
> > Omegix
> > Makers Local 256
> >
> >
> > _______________________________________________
> > Finance mailing list
> > Finance at lists.hackerspaces.org
> > http://lists.hackerspaces.org/mailman/listinfo/finance
> >
> >
> _______________________________________________
> Finance mailing list
> Finance at lists.hackerspaces.org
> http://lists.hackerspaces.org/mailman/listinfo/finance
>
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