Legal Question in Real Estate Law in Michigan
Rules regarding non-profit organizations
We are a township public library apart from the municipality but yet a part. Our building is 26,000 square feet of which a present we are using 6,700 square feet with plans for expansion to include the entire building. The township holds the title to the building until we finish paying the installment note. Then the library will have ownership. An internet provider wishes to put some equipment into our building in exchange for a free internet connection for the library. There equipment will occupy approx. 100 sq. ft. My question is: Does that change our non-profit building status to commercial and is there property tax liability for the library? The services are an exchange, no money will be involved.
1 Answer from Attorneys
Re: Rules regarding non-profit organizations
To Whom It May Concern:
This is in response to your email of July 6, 2001, which this office received on July 9, 2001.
Your situation is too complex to answer without more information and without doing some research regarding your township�s property tax code. In general, an exchange of space for services may be a taxable transaction. In addition, just because you have a taxable transaction, that does not necessarily change your non-profit status. Furthermore, I do not know how your township treats non-profit organizations with regard to property taxes. However, just because an organization is non-profit would not seem to be a valid basis for waiving property taxes.
Sincerely,
Charles L. Nichols
(313) 561-5700
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