To determine your housing allowance, you should calculate both your anticipated expenses and the fair market rental value of your home. Then request the lesser amount.

What is the benefit of clergy housing allowance?

What does the housing allowance permit? The housing allowance permits duly ordained, commissioned, or licensed clergy in the exercise of their ministry1 to exclude a portion of their compensation when reporting gross income for federal income tax purposes. The amount excluded must be used to provide housing.

Can housing allowance be used for mortgage?

Indeed, housing allowances frequently are used in qualifying for mortgage loans, though they’re only a single factor among many used by lenders during the approval process.

Can a missionary claim a housing allowance?

A minister who is furnished a parsonage may exclude from income the fair rental value of the parsonage, including utilities. The housing allowance may be excluded from gross income to the extent that it is used to pay expenses in providing a home.

What is included in a housing allowance?

Some of these items include: down payment on a home, mortgage payments (including both interest and principal), home equity loan payments (assuming the loan proceeds are used for housing-related expenses), real estate taxes, homeowners’ association dues, property insurance, utilities, furnishings and appliances ( …

Do you get Housing Allowance if you are a minister?

The housing designation does not determine how much a minister will be able to exclude from gross income. To meet the legal requirement, your housing allowance simply needs to be designated in advance of payment for the services you provide as a minister to the church.

Is the Housing Allowance part of your salary?

Ministers with this misconception do not view the housing allowance as “salary.” Perhaps a better term to describe this benefit is a “HOUSING EXCLUSION.” The portion of a minister’s salary that is properly designated as a housing allowance may be excluded from gross income and considered tax-free income.

Is the Minister’s Housing Allowance unconstitutional in Wisconsin?

*Note: On October 6, 2017, a federal judge in Wisconsin ruled that the housing allowance provided to clergy by the Internal Revenue Code is unconstitutional and violates the First Amendment’s Establishment Clause. This ruling will likely be stayed until it is decided by the U.S. Supreme Court.

What should a minister exclude from his allowance?

A minister may exclude no more than the lowest of the following amounts: The fair rental value of the home, including furnishings, appurtenances (i.e. garage), and the cost of utilities. It is a pastor’s responsibility to calculate each of these amounts.