The Housing Allowance Exclusion permits clergy to set aside a portion of their compensation specifically for housing expenses, shielding that amount from federal income tax. By reducing taxable income, clergy can significantly lower their overall tax burden. Although this exclusion is one of the most valuable tax advantages available to ministers, it is also one of the most commonly misunderstood and misapplied.
This Housing Allowance Guide covers:
- Housing Allowance Eligibility
- Types of Allowances
- Qualified Housing Expenses
- Non‑Qualified Expenses
- How to Substantiate Housing Expenses
- Designating a Housing Allowance
- How to designate part of your salary as a housing allowance
- How to amend an existing housing allowance
- Rules and limitations on how often or when changes can be made
Housing Allowance Limitations
- Determining Fair Rental Value
- What “Fair Rental Value” means
- How to calculate the fair rental value of your home
If you need guidance that is tailored specifically to your unique situation, we encourage you to connect directly with Pro Advisor Support. Their experienced team specializes in assisting clergy and church organizations with complex tax, payroll, bookkeeping, and HR matters. Whether you have detailed questions about compliance, deductions, or planning strategies, they can provide expert advice and walk you through the next steps with clarity and confidence.
Clergy Financial Resources
Tax I Payroll I Bookkeeping I HR | Consulting
11214 86th Avenue N.
Maple Grove, MN 55369
Tel: (888) 421.0101
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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.
For more information or if you need additional assistance, please use the contact information below.
Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369
Tel: (888) 421-0101
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com