Washington Court Addresses Taxation of Parsonages

Parsonages are only tax exempt when the pastor resides there, court rules.

Church Finance Today

Washington Court Addresses Taxation of Parsonages

Parsonages are only tax exempt when the pastor resides there, court rules.

A church’s senior pastor began living in the church parsonage in 1993. In 2000, the pastor purchased a vacant lot and began construction of a new home. The pastor and his family moved into the new home in March of 2001, even though construction continued for several months and the family kept much of their belongings in the parsonage until 2002. Parsonages are exempt from property tax under Washington law, and the church claimed that the parsonage should remain exempt through 2001 because the pastor’s family kept many of their personal belongings in the parsonage for much of that year. A tax assessor insisted that the parsonage ceased to qualify for exemption when the family moved out in March of 2001. A state board of tax appeals agreed with the assessor. It noted that the property tax law defined a parsonage as “a residence, owned by a church, that is occupied by a clergy person designated for a particular congregation and who holds regular services for that congregation.” The board concluded that when the pastor and his family moved out of the parsonage in March of 2001, it no longer qualified as a tax-exempt parsonage even though the pastor’s family stored many of their personal belongings there. Faith Tabernacle Open Bible Church v. State of Washington, Wash. Bd. of Tax Appeals, Docket No. 57097 (2002).

This article first appeared in Church Treasurer Alert, March 2003.

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

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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