Nonprofit Newswire | Taxing Nonprofit Housing Developments?

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April 1, 2010; The Elkhart Truth | This story from Goshen, Indiana depicts one of many challenges to the tax status of nonprofits all over the country but with a few interesting twists. The nonprofit in question, LaCasa, is a housing development corporation and already pays a substantial tax bill (more than $270,000) on its larger scale developments. What is being challenged is the status of a number of single-family homes that are being rehabbed. Larry Gautsche, the head of LaCasa, told the Elkhart Truth, “All of those properties we hope to move into home ownership at some point.” The agency not only rehabilitates the homes, but also educates potential buyers with an eye toward home ownership. Once a tenant can own a home, “we’re happy to sell it, at which point that house goes back on the tax rolls,” Gautsche told the Elkhart Truth.

The work is charitable, Gautsche said. He pointed to a home in the 500 block of East Washington Street that was donated to the agency. LaCasa paid a couple thousand dollars in back taxes owed on the duplex, then gutted and rebuilt the interior for about $95,000. It sold it for $80,000. “That house is now back on the tax rolls and they’re paying property taxes at a rate substantially higher than it was before.” Gautsche said.

He acknowledges, however, that he understands the concern since the occupancy rates in that area are down. This article is interesting for the dialogue on the issue at hand.—Ruth McCambridge