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

[Larry Miller (larry.miller]

Rosemary said, "We have had some interest in charging for use of common 
facilities  
such as payment for events in the common house, lodging in the common  
house, and use of laundry facilities.  How have other communities  
handled the accounting for these types of income for tax purposes? "

We currently charge for laundry and treat it as taxable. However, we then 
expense the
maintenance and warranty costs, and replacement reserves on the washers and 
driers as well as
estimated gas and electric usage and we usually don't end up with a profit.

As far as charging for guest rooms or common house use, when we looked into it 
here in
California, it appeared that we would be subject to all kinds of licensing and 
regulatory
issues. One way around that is not to charge, but to have "suggested 
donations." In California,
donations are not taxable, but you would need to check in your state.

In general, if you go the charging route, I believe you can estimate the 
deductible expenses by
looking at the total common house expenses and using a fraction of them 
corresponding to the
fraction of the usage that has been rented out. To be certain, you would need 
professional
advice.

Larry Miller
Oak Creek Commons