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Tax Issues Related to Employment

Clergy Housing Allowance Clarification Act of 2002

26 USC § 107; 26 CFR 1.107-1

This law amended the housing allowance exclusion of Section 107 of the tax code to clarify that the parsonage allowance is limited to the fair rental value of the clergy member's home. 

It should be noted that the housing allowance exclusion is limited to the least of three amounts:

  1. The rental (housing) allowance declared by the clergyperson's church for the year in question.
  2. The actual expenses of the clergyperson to provide a home in the year in question.
  3. The fair rental value of the clergyperson's home, including furnishings and appurtenances (such as a garage), plus the cost of utilities for the year in question.



United Methodist Housing Allowance Q and A

IRS Publication 517 Social Security and Other Information for Members of the Clergy