Organizations that provide seller-funded down-payment assistance to home buyers do not qualify as tax-exempt charities, the Internal Revenue Service said in a ruling Thursday. Down-payment-assistance programs, such as those at Nehemiah Corp. and AmeriDream, provide cash assistance to home buyers who cannot afford to make the minimum down payment or pay the closing costs involved in obtaining a mortgage. The gifts typically range from 2 percent to 5 percent of the purchase price, and home buyers aren't required to repay the money. Such programs can qualify as tax-exempt charitable and educational organizations under Internal Revenue Code section 501(c)(3) when properly structured and operated. In Thursday's ruling, the IRS provides a detailed discussion of the guidelines – including...
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