A halfway house is a transitional group living facility for individuals working their way back into society after incarceration or drug and alcohol dependence recovery. Some houses provide instructional living skills to individuals with disabilities for independent living. A halfway house is operated like a business, and must meet its financial needs and provide promised services.

Business Status

Much of the profit potential for a halfway house is related to recognition as a for-profit or non-profit business entity. As a non-profit organization, filings must be made with the state and the Internal Revenue Service. Non-profit status protects income from being taxed, but does not allow for profits to benefit the owner.


State and local licensing requirements also greatly affect a halfway house's profit potential. The National Institute on Chemical Dependency notes that licensing standards often require in-house professionals and programs that greatly limit profitability. NICD further adds that unlicensed homes may still be protected under the Americans with Disabilities and Fair Housing Acts.

Bottom Line

Operating the halfway house as a non-profit organization requires that no profits be pocketed by the owners or board of directors. Any profits must be re-invested into the facility or programs to benefit residents. The actual profit potential for a for-profit must be considered on an individual basis according to location, number of residents, cost of property and furnishings, utilities, food, maintenance, and what potential residents can and are willing to pay.