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Application of the Minister's Housing Allowance to Minister Employees of Religious Organizations

John R. Wylie, Esq., Steve L. Gaines, Esq., and Stuart J. Lark, Esq. | posted 11/02/2007
This article provided by the Engstrom Institute

I. Introduction

The Internal Revenue Code ("IRC") allows ministers in certain circumstances to exclude from their taxable income an amount attributable to housing costs. This provision, often called the Minister's Housing Allowance ("MHA"), offers ministers significant tax savings. For example, taking into consideration the fair rental value of a furnished house together with utilities and other costs, the MHA may eliminate as much as $15,000 or more from minister's taxable income. To obtain this benefit, the MHA requires employers to designate a portion of a minister's salary as a housing allowance. However, employers are generally willing to make this designation for qualifying ministers because the tax savings accrue to the qualified ministers without any cost to the organizations.

Although Congress probably created the MHA originally to accommodate ministers living in parsonages adjacent to the churches they serve, the statutory wording does not so limit the benefit. In fact, ministers ...

See also:

 housing allowance, IRS,taxable income, legall, ministers, taxes