Housing Allowance on Two Homes
Can a housing allowance be applied to more than one home?

Q: Our pastor owns two homes. One is the home in which he and his family resides. The second is a home in another state where he lived before accepting a call at our church a year ago. He has been unable to sell the former home, so he is renting it. He heard recently that a housing allowance can be applied to the expenses of more than one home. Is that correct? If so, can we increase our pastor's 2011 housing allowance to cover the expenses of both homes?

A: Your pastor is referring to a recent decision by the United States Tax Court in which the Court ruled that a minister could apply a housing allowance to expenses incurred in owning two homes. One home was his primary residence, and the second home was a vacation home.

The IRS refused to let the minister apply his housing allowance to expenses of his second home. It reasoned that the tax code allows housing allowances to be applied to the expenses incurred in owning "a home," and it concluded that the phrase "a home" means "one home." The Court rejected this interpretation on the ground that it amounted to a rewriting of the tax code by attempting to insert a "one home" limitation that did not otherwise exist.

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