How much can ministers who own their homes exclude as a housing allowance from income for federal income tax purposes?

Ministers who own their homes can exclude the lowest of the following three amounts from income for federal income tax purposes when their church employer properly designates a housing allowance for them:

  1. The housing allowance designated by their church; or
  2. Actual housing expenses (including mortgage payments, utilities, property taxes, insurance, furnishings, repairs and improvements); or
  3. The fair rental value of the home (furnished, including utilities).

Example: Reverend Smith owns his own home, and his church designated 40% ($16,000) of his $40,000 salary as an annual housing allowance in advance. His actual housing expenses for the year were $15,000. The fair rental value of his home (furnished, including utilities) was $17,000. Reverend Smith can exclude $15,000 from income because his actual housing expenses were lower than both the amount designated by the church and the fair rental value of his home.

For more information, visit GuideStone.org/TaxGuide 

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