New church parsonage allowance

by Herb Martin
(Grand Rapids, MI)

The Treasury regulations 1.107-(1)(b) require that a housing allowance be established in the prior tax year.

For a new church (and a new minister hire) it would be impossible to have established the parsonage allowance for the minister's first year under a strict interpretation. Therefore either the parsonage allowance would have to wait until the second year or can this requirement be considered not applicable in the case of a new church or a new hire?

Any thoughts?

Comments for New church parsonage allowance

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Jul 09, 2015
New Church Startup. . .
by: Lewis in NC

It is "proactive"; so it just needs to be approved before being activated, therefore if a new church starts and hires a minister July 1st, then the approval applies to 6 remaining months in that year.

Jul 10, 2015
New Church Parsonage Allowance
by: Bill D - MI

So if the housing allowance for a full year were to be $14,000, would the Church Council set the allowance at $7,000 since it would be only be effective for 6 months of the first year (beginning July 1st) or should it just be setup at the $14,000 value?

Jul 15, 2015
New church parsonage allowance
by: Lewis in NC

The council could approve an ongoing yearly housing allowance of $14,000 as you stated until further changes would be needed. Then (you are right) the first year the qualifying minister would be allowed only $7,000 maximum income to be excluded for housing allowance.

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