Deductibility of Designated Gifts for Parsonage Improvements

Question:

Some members in a church congregation want to buy new furnishings for its parsonage. Is there a way for the monies contributed to purchase the furniture to be deductible to the donors?

Answer:

Yes, just as a congregation may initiate, then "advertise" its establishment of a fund raising effort for any other activity related to its mission, a designated fund earmarked for parsonage improvements may receive tax deductible gifts. Of course, if these furnishings become the property of the minister occupying the parsonage, then their fair market value becomes taxable income to him in an identical manner as his standard cash compensation.

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MinistryCPA - Corey A. Pfaffe, CPA, LLC

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