Page 17: Clergy Housing for Your Primary Residence

Skip this page if you gave nothing to your church or any charity, and paid nothing out of pocket for a job outside ministry.

You need this page if you gave money or goods to your church or any charity, drove for volunteer work, or paid for books, tools, dues or training for a secular job. Your regular giving to your own church belongs here.

What this page does. It finishes the itemized deductions: charitable giving, unreimbursed expenses against secular W-2 wages, and miscellaneous items.

Before You Begin

Please have the following documents available:

  • Your church’s housing allowance designation or board resolution
  • Mortgage statements or rental records
  • Utility bills
  • Property tax records
  • Home insurance records
  • Receipts for furnishings, repairs, and improvements
  • Documentation related to a church-owned parsonage, if applicable
  • Retirement plan housing allowance documentation, if retired

Having these records nearby will make completing the page much easier.

Completing the Page

No Housing Allowance Designated?

If your church did not designate a housing allowance for the year, or you otherwise do not qualify for the housing allowance exclusion, simply check the box provided at the top of the page.

Choose Your Housing Situation

Select the housing situation that applies to you during the year.

If your living arrangement changed during the year, you may need to complete more than one section.

If You Owned Your Home

Please provide:

  • The dates you owned and lived in the home during the year
  • The amount of housing allowance designated by your church
  • The date the housing allowance was officially approved
  • The current estimated value of your home

The organizer will automatically estimate a fair rental value based on the information provided.

If You Rented Your Home

Please provide:

  • The dates you rented the home
  • The amount of housing allowance designated by your church

That’s all that’s needed for this section.

If You Lived in a Church-Owned Home (Parsonage)

If your church provided a parsonage or church-owned residence, please provide:

  • The dates you lived in the home
  • The furnished fair rental value established by the church
  • Utility expenses paid by the church
  • Any parsonage allowance designated
  • Whether the allowance was paid in addition to your salary or deducted from compensation already earned

This information helps determine the proper tax treatment of both the housing benefit and any cash housing allowance received.

Retired or Semi-Retired Ministers

If you received retirement income from a qualifying denominational retirement plan that designates a portion as housing allowance, please complete this section.

Enter:

  • The name of the retirement plan
  • Total retirement distributions received during the year
  • The portion designated as housing allowance

This information is often reported on Form 1099-R or provided in a separate letter from the retirement plan administrator.

Home Expenses

This section captures the actual housing expenses you paid during the year.

These expenses are important because the housing allowance exclusion cannot exceed your eligible housing costs.

Include Expenses Such As:

Housing Payments

  • Mortgage payments
  • Principal
  • Interest
  • Property taxes
  • Homeowners insurance
  • Private mortgage insurance (PMI)

If these items are included in a single monthly house payment, simply enter the total payment amount.

Rent

If you rent your residence, enter the rent paid during the year.

Down Payment and Settlement Costs

If you purchased a home during the year, include:

  • Down payment
  • Eligible settlement and closing costs

Utilities

Examples include:

  • Electricity
  • Natural gas
  • Water and sewer
  • Garbage service
  • Internet service

Furnishings and Appliances

Examples include:

  • Furniture
  • Beds
  • Tables
  • Chairs
  • Appliances
  • Household furnishings

Repairs and Maintenance

Examples include:

  • Plumbing repairs
  • Painting
  • Roof repairs
  • General upkeep

Improvements

Examples include:

  • New roof
  • Flooring replacement
  • Kitchen remodeling
  • HVAC replacement

Other Housing Costs

You may also include:

  • Homeowners association dues
  • Pest control
  • Lawn care
  • Snow removal
  • Security systems
  • Alarm monitoring
  • Cleaning products
  • Light bulbs and household batteries

The organizer will automatically total these expenses for you.

Common Mistakes to Avoid

Housing Allowances Cannot Be Backdated

A housing allowance generally becomes effective only after it has been officially approved.

For example:

  • If approved on January 1, it may apply to the entire year.
  • If approved in March, it generally applies only from that point forward.

Please enter the approval date carefully.

Plan Ahead for Next Year

One of the most common clergy tax mistakes occurs when a housing allowance is not officially designated before the beginning of the year.

To avoid losing valuable tax benefits, make sure next year’s designation is approved in writing before January 1.

Only Your Primary Residence Qualifies

Housing allowance expenses generally relate only to the home you actually occupy as your primary residence.

Expenses related to:

  • Vacation homes
  • Cabins
  • Rental properties
  • Investment properties

should not be included here.

Avoid Double Counting Housing Costs

If you enter your total monthly house payment, do not enter the mortgage interest and property taxes again as separate housing expenses.

Doing so would overstate your housing costs.

Down Payments Count

If you purchased a home during the year, your down payment generally qualifies as a housing expense for housing allowance purposes.

Many ministers overlook this important item.

Telephone Expenses

Basic residential land-line service may qualify as a housing expense.

However, personal cell phone expenses and long-distance charges generally do not qualify as housing expenses.

Personal Living Expenses Do Not Qualify

The following are generally not considered housing expenses:

  • Groceries
  • Personal clothing
  • Household help
  • Personal care items
  • Entertainment expenses

Only costs directly related to maintaining your home should be entered on this page.

Housing Allowance and Self-Employment Tax

A housing allowance exclusion reduces federal income tax but generally does not eliminate self-employment tax.

Unless you have received IRS approval for a ministerial exemption under Form 4361, the housing allowance generally remains subject to SECA tax.

Multiple Housing Situations

If you had:

  • More than one church
  • More than one designated housing allowance
  • A second residence covered by a housing allowance

please complete the additional housing allowance information requested later in the organizer.

When You’re Finished

Before moving on, take a moment to review the information you’ve entered.

Be sure you have:

✓ Included your housing allowance designation

✓ Entered the correct approval date

✓ Selected the appropriate housing situation

✓ Listed all eligible housing expenses

✓ Included utility and furnishing costs

✓ Completed retirement housing allowance information, if applicable

✓ Added notes for any unusual circumstances

A complete Page 17 allows us to accurately calculate your housing allowance exclusion and helps ensure you receive the full benefit available under current tax law. If you’re unsure whether a particular expense qualifies as a housing expense, simply include a note in the comments section and we’ll be happy to review it with you.