If a church provides a parsonage, the church should assume all costs for maintenance and utilities. These costs may be paid directly or the pastor may be given a parsonage allowance sufficient to cover these expenses. In addition to these costs, the church should provide and maintain major appliances in the parsonage. Pastors who live in an unfurnished parsonage also may receive a furnishings allowance or have a portion of their base salary designated as a furnishings allowance. If the pastor is offered such an allowance, it must be designated by the church council prior to the beginning of the year. While living in a parsonage has some advantages, it does not build equity for retirement. Some church organizations choose to compensate the pastor for this by making Housing Equity Contributions.

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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.

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