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Will Ministers Lose Tax-Exempt Housing Benefits?

Longstanding law challenged in federal court case.

Longstanding law challenged in federal court case.

by Richard R. Hammar

Section 107 of the federal tax code exempts from federal income tax (1) the fair rental value of a church-owned parsonage provided to a minister as compensation for ministerial services, and (2) the amount of a minister's compensation that is designated in advance as a housing allowance to the extent that the allowance represents compensation for ministerial services, is used to pay housing expenses, and does not exceed the fair rental value of the home (furnished, plus utilities).

Section 265(a)(6) of the federal tax code allows a minister of the gospel to claim itemized deductions for residential mortgage interest and property taxes, even though the money used to pay such amounts was received from a church or other employer in the form of a tax-exempt housing allowance.

The Freedom from Religion Foundation ("FFRF") and ...

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Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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Posted:
  • March 1, 2010

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