Remodeling and Pastor's Housing Allowance

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%.

Comments for Remodeling and Pastor's Housing Allowance

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Aug 15, 2022

Kitchen
by: Anonymous

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?

Jul 11, 2019

Remodeling Expenses and Housing Allowance
by: Vickey

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 =(

Jul 08, 2019

Actually, it is the home we now live in
by: Anonymous

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.

Jun 11, 2019

Housing Allowance for Current Home Only
by: Vickey

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

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Join in and write your own page! It's easy to do. How? Simply click here to return to Designating Housing Allowance.

If you want to DIY your payroll, I highly recommend you look at using Gusto! It is very user friendly and their support is awesome! Plus they know how to set up and maintain payrolls for churches and nonprofit organizations.

Note: I am a "partner" of Gusto, but as I have told you before ... I never recommend anything that we or our clients have not tried and love =)

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