Housing Allowance for mortgages that are paid in full

Our Pastor's mortgage is paid in full. How does this factor in with the housing allowance? Can only housing expenses such as utilities, appliances, etc. be included?

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Housing allowance for home that is paid in full

by Phil
(Bristol, TN)

I am an ordained minister who has benefited from the housing allowance for the past 11 years. It is my intention to pay my mortgage in full by the end of 2012. What is my recourse with the housing allowance going forward? Am I able to use the rental value of my home for my housing allowance? If so, how do I determine it?

Comments for Housing allowance for home that is paid in full

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Housing Allowance but no mortgage
by: DaisyPatch

Sandi, I think the IRS document http://www.irs.gov/pub/irs-utl/ministers.pdf
is incorrect. I think the question from Marty from SC should be answered "Yes, of course." In other publications the IRS includes more than mortgage and interest in the list of allowable expenses that can be included in figuring out a housing allowance. Such things as repairing your chimney, utilities and home phone are listed. There is no reason for utilities and repairs to stop being housing expenses just because the mortgage was paid off. I think whoever wrote that pdf wasn't thinking it through correctly. That wouldn't be the first time and it probably won't be the last that all the IRS documents don't perfectly agree with each other.

by Marty
(N. Charleston, SC, USA)

Can a pastor who has already paid off his mortgage receive HA to cover his utilities and maintenance upkeep?
Housing paid off morgage
by: Sandi

http://www.irs.gov/pub/irs-utl/ministers.pdf
Page 10:Example 3
C is an ordained minister and has been in his church's employ for the last 20 years. His
salary is $40,000 and his designated parsonage allowance is $15,000. C's mortgage was
paid off last year. During the tax year he spent $2,000 on utilities, and $3,000 on real
estate taxes and insurance. The FRV of his home, as furnished, is $750 a month.
The three amounts for comparison are:
a. Actual housing costs of $5,000 ($2,000 utilities + $3,000 taxes and insurance)
b. Designated housing allowance of $15,000
c. FRV + utilities of $11,000 ($9,000 FRV + $2,000 utilities)
C may only exclude his actual expenses of $5,000 for Federal income tax purposes. He
may not exclude the FRV of his home even though he has paid for it in previous years.
Swaggart v. Commissioner, T.C. Memo. 1984-409. $15,000 will be included in the
computation of net self-employment income.
Prayers
Housing allowance for home that is paid in full
by: Chuck McKinnis

I just realized that I posted this under the wrong topic, so here it is again.

I am an IRS certified tax preparer (but not an accountant). I think I understand the limitations placed on a ministerial housing allowance for it to be considered not taxable as income, i.e., the lesser of the housing allowance, the actual out-of-pocket housing cost, or the fair rental value of the house plus utilities. However, I am not sure how to determine the actual housing cost when no mortgage is involved. I have considered using the depreciation of the home over 25 years based upon its purchase cost, which is similar to what one would do if it were a rental property. Any comments?
home paid off and housing allowance
by: Anonymous

This is a detailed article from the IRS, scroll down to "The Parsonage Allowance" read example 3.
http://www.irs.gov/pub/irs-utl/ministers.pdf

Prayers.

also if you go to the irsvideos.gov site you can view webinars and videos, might want to let your board members know.
home paid in full housing allowance
by: Anonymous

IRS Pub 517: Home ownership. If you own your home and you receive as part of your salary a housing or rental allowance, you may exclude from gross income the SMALLEST of:

The amount actually used to provide a home,

The amount officially designated as a rental allowance, or

The fair rental value of the home, including furnishings, utilities, garage, etc.
house paid off
by: Anonymous

see publication 517

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Housing Allowance for a pastor

by Marty
(N. Charleston, SC, USA)

Can a pastor who has already paid off his mortgage receive HA to cover his utilities and maintenance upkeep?


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