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What are the mortgage interest rate laws for tax exempt nonprofits

Customer Question
concerning rates, and tax refunds...
What are the mortgage interest rate laws for tax exempt nonprofits concerning rates, and tax refunds for paid out taxes over the course of a tax year ?
Submitted: 6 years ago.Category: Tax
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Answered in 3 minutes by:
1/1/2011
Tax Professional: Stephen G., Sr Income Tax Expert replied 6 years ago
Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7,211
Experience: Extensive Experience with Tax, Financial & Estate Issues
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Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Stephen E. Grizey :

If you'd like I'll opt out of this, but I didn't want to leave you hanging----I answered both of these questions--------maybe the answers got lost in the posting problems?

Stephen E. Grizey :

There's no cap on interest rates for non-profits (now referred to as not-for-profits).

Stephen E. Grizey :

My last answer explained in detail the procedures for real property taxes...........are you referring to some other type of tax?

JACUSTOMER-t5fkite7- :

Tax exempt entities are not supposed to pay taxes.

JACUSTOMER-t5fkite7- :

Tax exempt entities are not supposed to pay taxes. What is the process for getting the tax refunds for mortgage related taxes?

Stephen E. Grizey :

Are you talking about real estate taxes? Those are the only taxes normally paid with your mortgage payment.I gave you the exact procedure you have to use to attempt to be exempted from real property taxes. Who owns the property? If it is you or your spouse, you won't get any exemption for past or future real estate taxes. Clergy have to pay taxes just like everyone else. Churches are exempt. How is the Church organized? What type of entity do you have?

JACUSTOMER-t5fkite7- :

Church entity. The Church owns the property through my wife and I. Mortgage taxes and real estate taxes appear to be related. Are you stating otherwise?

Stephen E. Grizey :

There is no such thing as "mortgage taxes". There are real estate taxes often paid into an escrow account with the lender and then periodically turned over to the taxing authority.

JACUSTOMER-t5fkite7- :

Alright then. Real estate taxes on Church owned property sir.

Stephen E. Grizey :

The "Church" can't own the real estate "through my wife & I". Whoever is on the deed which is recorded in your local registry of deeds, legally owns the property and will be taxed on it. Unless you have a separate legal entity, and property is recorded in that name; you won't be entitled to any exemption.

JACUSTOMER-t5fkite7- :

I have such a document. What is the recoupable exemption percentage concerning the taxes?

Stephen E. Grizey :

You having the document doesn't help. The Registry of Deeds will only accept deeds for recording in the name of individuals, partnerships, corporations, LLC's, LLP,s or trusts. Unincorporated entities, for example "Ace Carpet Company" or "My XYZ Church" are not eligible to hold title to real property.

Stephen E. Grizey :

If you had such an entity, and the status as a Church was recognized by the taxing authority, then there would be no real estate taxes. But as I explained in my answers to the other series of questions the ability to recover taxes already paid would depend on the assessment date & filing for an abatement within that period. On a going forward basis, if the real property taxes are substantial, you'll need to measure the ongoing cost of maintaining a separate legal entity, getting the real property title transferred to it & applying for the exemption you are entitled to. I strongly recommend that you seek legal counsel to accomplish this as you may very well only get one attempt at it. As hard as it might be for you to believe, running a legitimate Church, there are those among us that routinely use this method to attempt to avoid real estate and income taxes on the commercial ventures they undertake. so that's what you're up against.

Stephen E. Grizey :

On another matter, surely you don't consider the $12. in the last question as the substantial bonus you promised?

JACUSTOMER-t5fkite7- :

I told you the Church property was owned through my wife and l. No contradiction. I clearly stated my questions for amended tax year filing. No contradiction.

JACUSTOMER-t5fkite7- :

I told you the Church property was owned through my wife and l. No contradiction. I clearly stated my questions for amended tax year filing. No contradiction. I resent your questioning the legitimacy of my Church given my well documented and free contributions to a global representation.

Stephen E. Grizey :

I'm not doing any such thing........in fact reread my answer............the point is the church can't own the property for purposes of real estate taxes, among other things "through your wife and I".............I'm just trying to save you from running into a stone wall. This isn't my first rodeo.............I've represented major not-for-profits involving several "subsidiary" entities, Universities, Hospitals, Social Service & Health Care organizations & yes several clergy and my own Church. So, do what you wish with my advice, but I stand behind what I'm telling you 100%.

Stephen E. Grizey :

What you're getting with "JustAnswer" is Rolls Royce advice at VW prices. We aren't doing this for the money. We generally gethu our professional satisfaction from helping people. I'm not judging you or the church you've organized in any way. You are the customer. We try to treat you that way. If I accept a question I work just as hard for $5. as I do for $100. As I recall, nobody wanted to take this topic on. Well I get a lot of those........we use to call them "loss leaders"............but I don't look at it that way......I also took you at your word that you were willing to sweeten the pot so to speak.............either way......I hope I've helped you.

JACUSTOMER-t5fkite7- :

God will judge us both appropriately.

JACUSTOMER-t5fkite7- :

Have a good day sir.

Stephen E. Grizey :

Yes, I'm sure of that & you have a Happy New Year & good luck with the church. Thanks again!

Stephen E. Grizey :

..

Stephen G.
Stephen G., Sr Income Tax Expert
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Satisfied Customers: 7,211
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