Qualifying Housing Expenses – IRC Section 107
Under IRC Section 107, the term “housing expense” for ministers includes costs associated with providing and maintaining a home. Unfortunately, the IRS has not published a defined list. Here are some detailed examples of specific expenses that can be considered for maintaining a home under IRC Section 107: Rent or Mortgage Rent Payments: Monthly payments…
IRC Section 107 Housing Expenses for RV Owners
A minister’s housing (or parsonage) allowance under IRC 107 is excludable from gross income only to the extent it is used to rent or otherwise provide a bona fide “home”—that is, a dwelling place complete with the usual amenities (such as furnishings and, for example, a garage) as indicated in the statute and regulations (IRC 107; § 107,…
2025 Housing Allowance Tips
Who is Eligible for a Housing Allowance? According to the IRS definition, clergy who are duly ordained, commissioned, or licensed by a recognized religious body constituting a church or church denomination. Does the Church Have to Approve It? Housing allowances for a qualifying religious organization must be designated in advance, clearly defined, and specified before…
IRS guidelines on designating a housing allowance
The IRS guidelines on designating a housing allowance for clergy are detailed and specific. Here is a comprehensive overview: Designation of Housing Allowance Advance Designation Requirement: The housing allowance must be officially designated in advance of payment by the employing church or other qualified organization. This designation can be made in an employment contract, in…
Clergy Housing Allowance and FAFSA
Clergy housing allowance counts as income for FAFSA purposes. According to IRS guidelines, while the housing allowance is excludable from gross income for income tax purposes, it is not excludable for self-employment tax purposes. This means that the housing allowance must be included for the Free Application for Federal Student Aid (FAFSA), which considers both…
Can the board declare a housing allowance without a specific amount?
When your board declares your annual clergy housing allowance, they must declare a specific dollar amount or percent as the housing allowance. The designation must be made in advance of the payment. A general declaration that you have a housing allowance without naming a specific amount would be insufficient. Designating a housing allowance without specifying…
What type of expenses qualify for clergy housing allowance
The clergy housing allowance, as outlined in Section 107 of the Internal Revenue Code, allows ministers to exclude from gross income the rental value of a home furnished to them as part of their compensation or a rental allowance paid to them as part of their compensation, to the extent that it is used to…
Can all church employees qualify for housing allowance?
Q. Can all church employees qualify for housing allowance? A. No. Section 107 of the Internal Revenue Code allows only a “minister of the gospel” to have a housing allowance. Thus, only taxpayers who are serving as clergy under IRS rules for tax purposes are eligible for a housing allowance. These rules state that the…
Clergy Housing Allowance
Clergy Housing Allowance Ministers who own their home can not only take advantage of the housing allowance by including mortgage payments as housing expenses but also can deduct mortgage interest and property taxes on their itemized deductions. This is often referred to as a “double deduction. Once ministers pay off their mortgages, however, they can…
Limitations on the Housing Allowance
Limitations on the Housing Allowance After reading about the Housing or Parsonage / Manse Allowance, you may be thinking, “if I designate my entire salary as a Housing Allowance, would it all be excluded from federal income taxes?” IRS has already addressed this by limiting the Allowance to the least of the following: 1. The…
