Designating A Housing Allowance
Some congregations provide their Pastors with a housing allowance in place of a parsonage. This figure should reflect the realistic fair rental value of a home in the community, and would normally include such costs as insurance, utilities and taxes. Generally, a minimum cash payment of $12,000 is required for a housing allowance when a…
Down Payment Qualify for Housing Allowance?
A down payment on a home may be excluded from income as a housing allowance, assuming it does not exceed housing limitation. You can exclude the lowest of the following three amounts from income for federal income tax purposes when the church or pension properly designates a housing allowance: The housing allowance designated by the…
Can I amend my housing allowance?
The housing allowance resolution can be amended at any time. However, it can only be applied prospectively. A pastor’s amended housing allowance must be established or designated by the church. The preferred way to do this is for the church council/board to adopt the housing amendment resolution in the minutes of the meeting.
Can the housing allowance resolution be amended mid-year?
The housing allowance resolution can be adopted or amended at any time during the year. However, it can only be applied prospectively, not retroactively. It is important for the housing allowance resolution to be adopted by the church council prior to each calendar year (or prior to the start date), which would accurately reflect the…
Five things to remember about clergy housing allowance
Clergy are permitted to exclude from their taxable income the costs of maintaining their primary residence. This housing allowance is not included as taxable income on pastors’ W-2s. There are rules for determining, documenting and reporting a housing allowance that need to be followed. Clergy need to determine the cost of maintaining their primary residence for…
Housing Allowance Withstands Atheist Challenge
Today, the Seventh Circuit Court of Appeals reversed a 2013 ruling by U.S. District Judge Barbara Crabb that identified the housing allowance benefit for clergy(IRS Code §107(2)) unconstitutional. The original lawsuit, filed by the Freedom From Religion Foundation argued that the parsonage allowance exclusion violates the separation of church and state and the constitutional guarantee…
Clergy Housing Allowance Ruled Unconstitutional
BREAKING NEWS: Friday, November 22, 2013, U.S. District Judge Barbara Crabb in Wisconsin ruled that the “clergy housing allowance” portion of the Internal Revenue Code(IRC-107(2)) is unconstitutional. This ruling could have a enormous impact on clergy around the country. According to a 2002 statement by former U.S. Rep. Jim Ramstad (MN-R), the clergy housing allowance exclusion saves…
Housing Allowance: Church Owned Parsonage vs. Renting vs. Owning
Federal Income Tax: Parsonage allowances: Ministers who live in a church-provided parsonage do not pay federal income taxes on the amount of their compensation that their employing church designates in advance as a parsonage allowance, to the extent that the allowance represents compensation for ministerial services, is used to pay parsonage-related expenses such as utilities,…
How do you determine the fair rental value of the parsonage or pastor’s home?
In general, the fair rental value of the property is a question of facts and circumstances based on the local real estate market. If the pastor rents his home, the amount of the rent would be presumptive evidence of the fair rental value (assuming the rental agreement was an “arm’s length” transaction). Other methods of…
Can clergy living in a parsonage receive a parsonage allowance?
Pastors living in parsonages should be provided with a “parsonage allowance.” Even in a parsonage, every pastor has some expense in maintaining his or her home. The amount of the allowance may depend on several factors: whether or not the parsonage is furnished, who provides the upkeep, pays the utilities, etc. When the parsonage allowance…
