Drexel Hill, PA asked in Business Formation, Land Use & Zoning and Tax Law for Pennsylvania

Q: Is it possible to operate a nonprofit and an unrelated for profit business on the same land?

I, along with 3 others (one of whom is my husband) are looking at buying a large plot of land. Two of us have experience farming and we would like to farm the land for personal use. We would also like to provide food from the farm to those in need. So we would like to apply for nonprofit status and work with local shelters and individuals to help get healthy, local food to those who need it.

As a separate venture, we would also like to use part of the land as a venue, which would be a for-profit business. I am wondering if it is possible to operate a nonprofit and a for-profit on the same land. And if so, what would the roadblocks and requirements be for this sort of arrangement?

1 Lawyer Answer
Michael Cherewka
Michael Cherewka
  • Tax Law Lawyer
  • Wormleysburg, PA
  • Licensed in Pennsylvania

A: The "simple" answer to your question is it is possible to operate a non-profit and a for-profit on the same land. However the more important and complex questions are (i) does it make sense from a tax and business point of view; and (ii) what are your for-profit goals or objectives. You have a number of interrelated issues to plan around: (i) zoning-your for-profit business may not be permissible in an Agriculture zone; (ii) real estate taxes-the non-profit may qualify for real estate tax exemption, but the for profit will not, and if land is rented to the for-profit it can cause loss of exemption ; income tax issues - unless the non-profit will own the for-profit, if you are involved in both careful planning is required to make sure you do not violate the non-profit requirements due to conflict of interest and other issues

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