Pastor purchasing his house

by Richard

The church includes a housing allowance between 20 - 28% of the pastor's salary? This does comply with IRS regulations, right?

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Feb 17, 2012
Claiming a housing allowance exclusion
by: Vickey

A church can designate any reasonable amount they want for a pastor’s compensation (up to 100%); however, that pastor can only claim the housing allowance exclusion from income tax on the lesser of the following amounts:

  • The amount actually spent on eligible housing expenses.
  • The fair market rental value plus furnishings and utilities.
  • The amount officially designated in advance as housing allowance

You can read what the IRS says about housing allowances in their Pub 417 (Earnings for Clergy) and their Pub 517 (Social Security and Other Information for Members of the Clergy and Religious Workers).

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