Cohousing-L Mailing List: Re: tax and legal issues for common house usage

[Sharon Villines (sharon]

On Aug 4, 2008, at 1:29 PM, astromezzo [at] mac.com wrote:

> We did consult our tax accountant briefly about the tax issues but
> weren't entirely satisfied with the answer, which is why I'm asking
> here to find out what happens in other cohousing communities.

We take donations and they are taxed as income -- they go into the  
general pool of income.

The big issues with charging rent are two fold. One is insurance and  
legal implications. The tax implications may not be so great as  
liability insurance and laws governing what is required in spaces  
offered for rent.

The second is the expectations of renters. If the space is free or for  
donations, they have no expectations. It is take it or leave it. If  
they are paying rent they may begin making demands that they would not  
otherwise make. It is extra work, usually unwelcome, for community  
members to meet these demands by ensuring that the space is as they  
expected. That flip charts and markers are where they are expected to  
be, etc.

Once you step over that line to commercial, life changes. My own  
concern about commercial rentals is that it would change the look and  
feel of the CH as you adapt the room to commercial use. And I don't  
want to walk through and see strangers in it all the time. Our dining  
room is open so we have to go through it to get to the mail room, kids  
room, etc.

There is also the issue of determining how often you rent, to groups  
of what size, what kinds of deposits you require against damages. etc.

What we do is allow members to reserve the space for "outside" groups  
and ask for donations. We have no set amounts. These are often  
retreats from a person's office or a friend's birthday party with few  
or no residents attending. The member who reserves the space is  
responsible for the guests and clean up, and is expected to be in  
attendance.

If a meeting is to be repeated more than 3 times (a book group every  
Wednesday, for example), involves money, or some other things I can't  
remember right now, it must be posted for objections.

Events cannot be announced to the public in any case. This is for  
security. We have concerns about too many people showing up since we  
are in an urban area. Or unsavory characters. Everyone who enters the  
commonhouse walks down our green and through children's play areas.  
Entry to the dining room also gives access to corridors that are  
behind a security system. Residents who live on those corridors expect  
them to be secure.

If a group approaches us about using the space, usually a neighborhood  
group, someone offers to host them. Neighborhood groups do not  
generally give donations although they might send a member or two to  
help on a workday.

When we moved in, people had very different expectations about the CH.  
Was it a private space or a source of income? One person thought we  
were building it because it would bring in revenue and we would use it  
more occasionally. Others thought we would never have outside groups  
and it would be a very private space.

Use of the guest rooms is also on a donation basis. A member has to  
host the person and take responsibility for the cleaning, washing  
sheets, checking out and in keys, etc. There are some people who will  
host traveling cohousers. Since we don't have a cleaning service doing  
the cleaning, it is a real responsibility.

Essentially, we have found that looking at the responsibilities  
involved determines what we do. What will this involve, what are the  
risks, and who will take responsibility?

Without that person who wants to take something on, it doesn't happen.  
Commercial rentals would be a lot of work and would require a lot of  
study to be sure the rentals were reimbursing the community for all  
the costs to the community.

Sharon
----
Sharon Villines
Takoma Village Cohousing,Washington DC
http://www.takomavillage.org