A minister cannot claim housing expenses for the months they are not employed as a minister.
Section 107 of the Internal Revenue Code specifies that the rental value of a home furnished to a minister as part of their compensation, or a rental allowance paid to them as part of their compensation, is excludable from gross income only to the extent that it is used to rent or provide a home and does not exceed the fair rental value of the home, including furnishings and utilities. This exclusion applies only to the period during which the minister is employed and performing ministerial duties.
In Rev. Rul. 72-588, it was clarified that expenses incurred to maintain a home during a period when the minister is not performing ministerial duties (e.g., during a temporary absence) are not considered amounts expended to provide a home for purposes of Section 107. Instead, such expenses are treated as expenses incurred in the production of rental income if the home is rented out during the minister’s absence.
Therefore, if a minister is not employed as a minister for certain months, they cannot claim housing expenses for those months under the housing allowance exclusion provided by Section 107.
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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
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