Housing allowance policy for your employee handbook
Housing allowance policy for your employee handbook Below is a Housing Allowance Policy suitable for inclusion in a church or ministry Employee Handbook. It is written in neutral language and reflects IRS requirements found in Section 107 of the Internal Revenue Code (no external citations needed for policy documents). Housing Allowance Policy (For Ministers and…
2026 Housing Allowance Guide
2026 Housing Allowance Guide Now Available 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,…
2026 Housing Allowance Guide
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…
Determining the Fair Rental Value of Clergy Housing
A common approach to estimating the fair rental value (FRV) of clergy housing is to apply a fixed percentage—often 12% to 15%—of the home’s current value. A more reliable alternative is to use methods such as a comparable rental analysis or a comparable sales evaluation performed by a qualified third party. Under IRC § 107,…
Guide to Housing Allowance Compliance
Housing Allowance Checklist for Clergy and Churches Board Approval Ministers may exclude a designated portion of their income as a housing allowance from federal income taxes—provided it compensates ministerial services. The church board (or governing body) must determine eligibility and formally approve the allowance before the calendar year begins or prior to the minister’s start…
Can a Minister Claim Housing Expenses When Not Employed?
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…
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…
