IRS: Down Payment Grants Not Charity If Funded by Seller

IRS belatedly denies charity status to organizations that provide down payment assistance—funded by home builders and home sellers.

A new IRS revenue ruling has closed off charity status to nonprofits that provide downpayment assistance to home buyers, in cases where the home sellers (builiders and private sellers) have provided the funding for the downpayment grant. 

We discussed these organizations not long ago in connection with a GAO report criticizing these schemes because they encouraged home purchase via FHA loan by unqualified buyers and increased the price of homes.  FHA, unlike conventional lenders, permitted the practice of seller-funded downpayment assistance. 

The organizations involved have become huge.  Nehemiah Corporation of America (EIN 52-2145694 Form 990) reports income of $143 million, AmeriDream (EIN 52-2145694 Form 990) reports $97 million, and The Buyers Fund (EIN 87-0635224 Form 990) $167 million.  All of these organizations follow the buyer-funded model, and the bulk of their income appears as fees rather than contributions. 

The revenue ruling allows organizations that raise money from sources other than sellers to continue as charities. Such organizations, like Family Housing Resources (EIN 86-0750139 Form 990), are much smaller.  Phoenix-based FHR has a $1.2 million assistance program alongside its $8.2 million in low-income rental properties. 

One lesson here is that rapid growth of a charity is not necessarily a sign of health.  Growth may be because an organization (or in this case a whole industry) has found a loophole that allows it to operate a business scheme as a charity. 

It is also heartening that the IRS is showing some life in curbing these schemes, as it recently did with credit counsellors.

Comments

[Clark]

There are a number of really bad downpayment assistance charities that should have been shut down a long time ago. But, there are others, like Nehemiah who are doing some very good work --- legitimately helping many low-income homebuyers and doing a lot of innovative charitable work that extends well beyond homeownership.

What's interesting about this situation is that the IRS and HUD have repeatedly approved this as a charitable model. Through these programs, hundreds of thousands of low income homebuyers have been able to purchase a home --- without government assistance.

For the past three years HUD and FHA have been wanting to replace this model with one of their own --- at taxpayer expense, of course. HUD has been unable to get the congressional support that it has needed.

Interesting isn't it, that these programs that have been approved by both these agencies for nearly 10 years are now being label "scams".

Watch for a push for a replacement FHA program that will cost the taxpayer and burden the low-income homebuyer with higher mortgage insurance premiums.

[coach outlet]

Can share the pain of others, is a human; to share the happiness of others, is God.

[バーバリーマフラー]

複数の政府関係者が明らかにした。外交安全保障政策で助言を得るためとしているが、政府の役職に野党関係者を起用するのは極めて異例だ。国会対策で焦点となる公明党との関係強化を模索する狙いもあるようだが、民主、公明両党間の正式ルートで協議した痕跡はあまり見えず、“民公”接近につながるかどうかは微妙だ。
関係者によると、高野氏の起用は、藤村官房長官が高野氏に「外交機能を強化したい」と打診した。政府高官は３日、「外交関係のアドバイザーだ。国連平和維持活動（ＰＫＯ）の問題も含め、広く意見をうかがう」と説明した。ただ、政府内にも「公明党とのパイプ強化を狙ったものだろう」との見方が強い。

[ティンバーランド]

ティンバーランド付近住民らが数日前から目撃したのも同じ男とみられ、近くの女性も取材に「事件が発覚する何日か前の午前８時ごろ、尾崎さん宅の玄関門扉前に段ボールを持って立つ黒っぽい服装の不審な男を見た」と話した。東側の別の門扉の前には、バイクが止められていたという。

　ティンバーランド一方、堺市南区の歯科医師の妻、田村武子さん（６７）が行方不明になっている事件に絡んで窃盗容疑で逮捕された西口宗宏容疑者（５０）とよく似た男が尾崎さんの事件があった日、同市内の農協支所で、尾崎さんのキャッシュカードを使い残高を照会。その際、支所付近の防犯カメラには、黒っぽい服装の男が黒いバイクで乗り付ける姿が記録されていた。

　府警は、西口容疑者方から黒い原付きバイクを押収し、関連の有無を調べている。