September 08, 2016

Expenses of Selling Home as Qualifying Housing Allowance Expenditures

Question:

Are expenditures related to the sale of a home considered to be qualifying housing allowance disbursements?

Answer:

The Internal Revenue Code lists only food and servants as specific exceptions to otherwise qualifying housing allowance expenditures. The amounts must be incurred relative to the minister’s principal residence and for costs directly related to providing a home. According to Internal Revenue Regulation §1.107-1, Rental Value of Parsonages, only food and servants are specifically excluded.

With every housing allowance the three part test must be considered (see Ministry CPA Blog past post regarding the three-part test). For example, if a minister's fair rental value is less than his actual expenses, he would receive no tax benefit from including expenditures from the sale of his home. This is often the case in the event of the sale of a minister's home.

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