What is the housing allowance?
A licensed, commissioned, or ordained minister who performs ministerial services as an employee may be able to exclude from gross income the fair rental value of a home provided as part of compensation (a parsonage) or a housing allowance provided as compensation if it is used to rent or otherwise provide a home. A minister…
Guide to Clergy Compensation
Clergy Status is a person who has been granted ecclesiastical authority by an association, denomination, or state through the rite of ordination, commissioning, or licensing. 1. Generally, an ordained minister has a Master of Divinity from an accredited theological school and is recognized through the rite of ordination to preach and teach the gospel, to…
Can I take out a home equity loan and use that as an expense for the housing allowance?
Answer: Yes, you can use a new home equity loan for your housing allowance, but with some restrictions. The Internal Revenue Service allows ministers to use home equity loans as a housing expense, but only if the loan is used for direct housing-related expenses (i.e. for maintenance or the purchase of a home). If you…
If I pay off my mortgage, how does that affect the housing allowance?
Ministers who live in the same home for a long time may reach the point where they are paying off their mortgage. At this point, many ministers wonder how not having a mortgage will affect their housing allowance. Fortunately, you can still qualify for the housing allowance if you have paid off your mortgage. However,…
FAQ: Can I only change my housing designation once a year?
No, you can change your designation at any time throughout the year, and you can amend it as needed. IRS details the housing allowance in section 107 of the Internal Revenue Code. While the IRS does not specify when you can designate, they do specify that designating must be done in advance. You can only…
Can a storage unit rental qualify for housing allowance?
Question – Can I claim storage unit rental as an expense related to housing allowance? Answer – No. IRS only allows expenses related to your primary residence. A separate storage unit is not attached to the home in any way, so it cannot be used as a housing expense. A similar situation occurs with utility…
I work for many different churches and get paid on a 1099-MISC. Can I still designate a housing allowance?
Most ministers work for one church and receive a W-2. However, there are ministers who do not have a regular church and end up getting paid on a 1099-MISC during the year. This includes ministers doing pulpit supply and traveling evangelists. Can these 1099-MISC payments be eligible for a housing allowance? The answer is yes,…
Can I designate a housing allowance for multiple years?
A frequently asked question about Clergy Housing is whether a minister must re-designate their housing allowance every year or if they can simply enter a designation that covers multiple years. Surprisingly, Clergy are able to designate for periods longer than a single year. IRS does not specify how long a housing allowance designation must remain…
Can my severance pay be designated as housing?
Whether it is through resignation or retirement, a Church may agree to pay severance pay when a Minister leaves a position. In almost all cases, this severance pay is considered taxable income to the pastor or minister. The question then arises- could you designate this severance pay as housing? This is actually a question of…
Can Construction Costs be used for the Housing Allowance?
If you’re building a new home or you’re renovating an existing home, you may be wondering: Can I include these construction expenses for my housing allowance? The IRS and federal tax courts have been very clear that Ministers are only permitted to use one residence for the housing allowance. If you have two homes, you…
