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January 11, 2011

Tax Ruling May Help Pastors Who Own Two Homes

What churches should note for 2011 housing allowances.

Late in 2010, the United States Tax Court ruled a pastor could apply a housing allowance toward expenses incurred from a primary residence and a vacation home.

What are the implications for church leaders? Well, while many may not own a vacation home, many may find themselves in positions where they answered calls to ministry in other communities, only to fail selling their former homes. For pastors in these situations, and others, the decision may have significant relevance.

Watch as Richard Hammar explains the important ramifications of this ruling:

Related Tags: benefits, church, churches, compensation housing allowance, IRS, pastors

Comments

In addition to the concerns Mr. Hammar expressed (i.e.-the ruling may be overturned on appeal, the IRS may not acquiesce), I have two other concerns that make me hesitant to recommend establishing a housing allowance for two separate residences. First, the years at issue in the case were 1996-99, which were before Congress changed the Code in 2001 to limit a housing allowance to fair rental value. How does this case affect the current Code? Second, Congress has been very intentional in keeping benefits from a housing allowance and an actual parsonage equal. If establishing a housing allowance on a second residence is currently allowable, it probably won't be for long.

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