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Continuing education for ministry leaders
Weekly Lessons, created and written by Richard R. Hammar, J.D., LL.M., CPA, give you a basic legal overview of essential topics based on staff or volunteer positions within a church.

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Week of June 23

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This Week's LessonWeek of July 7

Housing Allowances

Introduction

Our lesson this week examines the topic of Housing Allowances. The Executive Summary provides a concise review of the key points. Before we get started, test your knowledge by completing the following quiz.

Pastor T is the senior pastor of a church. For the current year, his church compensation consists of a salary of $30,000 and a housing allowance of $15,000. During the year, Pastor T incurs housing expenses of $16,000 (mostly mortgage payments, utilities, and furnishings). The "fair rental value" of the home (furnished, plus utilities) is $12,000. How much of the church-designated housing allowance ($15,000) is nontaxable in computing Pastor T's federal income taxes? This question is addressed in this week's lesson.

Weekly Quiz

Instructions Click on the correct answer for each of the following questions.

Executive Summary

Ministers can exclude from their federal income taxes the portion of their ministerial income designated by their employer as a "housing allowance" to the extent that the allowance is used to pay for housing-related expenses (such as mortgage payments, utilities, property taxes and insurance, furnishings, and repairs) and, in the case of ministers who own their home, does not exceed the "fair rental value" of their home.

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