I am in the process of remodeling an old house for my wife and me to live in for retirement.
I am presently serving a small rural congregation.
The total cost for renovation is $160,000. The total investment with the purchase of the house is $430,000.
If I withdraw from my retirement account $60,000 to pay off the balance of the remodeling costs, can this be considered Housing Allowance?
The approximate Fair Rental value is $64,000 using the Comparable Sales Method of 15%.
4Comments
Kitchen
AAnonymous
I am in the process of redoing our home that we live in. I started a year ago and pretty much completed everything except for the kitchen.I have exhausted all our monies and maxed out our loan to income ratio. I need help to finish. What can I do to get the help?
Remodeling Expenses and Housing Allowance
VVickey
Thank you for the clarification.
In that case, you should be able to claim the actual remodeling expenses; however, I find it is usually the "FMRV" plus furnishings and utilities clause...that robs ministers of being able to claim reno expenses =(
In that case, you should be able to claim the actual remodeling expenses; however, I find it is usually the "FMRV" plus furnishings and utilities clause...that robs ministers of being able to claim reno expenses =(
Actually, it is the home we now live in
AAnonymous
This is the home we live in from the beginning of the remodeling. We do not have a second home. I hope this clarifies the situation. Thank you for your guidance.
Housing Allowance for Current Home Only
VVickey
If I am understanding you correctly, you are living in a home and remodeling another one for your retirement.
If that is the case, you can only claim housing expenses on the home you are currently living in.
Since the housing allowance is limited to the lesser of the following 3...I don't see how you could claim those renovation expenses on the retirement home; however, I strongly advise you to seek the advise of a qualified tax professional. Guidestone might be able to advise you.
1) The amount actually spent on eligible housing expenses in your current home. (You cannot claim housing expenses for 2 homes such as a vacation home)
2) The fair market rental value plus furnishings and utilities
3)The amount officially designated in advance and paid by the organization as a housing allowance
If that is the case, you can only claim housing expenses on the home you are currently living in.
Since the housing allowance is limited to the lesser of the following 3...I don't see how you could claim those renovation expenses on the retirement home; however, I strongly advise you to seek the advise of a qualified tax professional. Guidestone might be able to advise you.
1) The amount actually spent on eligible housing expenses in your current home. (You cannot claim housing expenses for 2 homes such as a vacation home)
2) The fair market rental value plus furnishings and utilities
3)The amount officially designated in advance and paid by the organization as a housing allowance