Assuming that the church is a stand-alone organization and not part of a hierarchical system, unless there is some unusual provision in the deed to the church real estate, it is probable that the church can sell its building and keep the proceeds as liquid assets, to be held, of course, for the benefit of the church.  I don’t see any fundamental reason why the church could not operate out of someone’s home, although there may be local zoning restrictions and if you were fully utilizing a $2 million property it may be somewhat impractical.

The church may invest the proceeds and pay no tax on the income.  Investment income is considered passive income and not included in the definition of unrelated business taxable income.  (See Ready Reference Page: “Nonprofits Often Worry About UBIT.”)