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Q&A: Are We Legally Required to Verify a Housing Allowance is Fair?

The answer is no, and several reasons explain why.

Does a church have a legal obligation to review the housing allowance requested by a pastor to determine both how it was computed and whether it fairly reflects the value of expected housing expenses for the new year?

The simple answer is that while a church is free to exercise this level of oversight over the pastor's housing allowance, this is not legally required and, in fact, is rarely done. Section 107 of the tax code specifies that "in the case of a minister of the gospel, gross income does not include—(1) the rental value of a home furnished to him as part of his compensation; or (2) the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home and to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of utilities." ...

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Posted:
  • March 1, 2012

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