Good or Bad? Do You or Your Pastor Use This Deduction? Judge Strikes Down Housing Tax Break for Pastors!!
Reader do you think the court is wrong here in claiming it is unconstitutional? A federal judge has ruled that an IRS provision that exempts clergy from including their rental allowance in their reported gross income is unconstitutional.
Many parishes provide housing for their clergy. The value of that housing is not considered part of their income. My home church (where I grew up) and the church that I attended since moving to Jacksonville FL, has a parish house where the pastor lives. Many jurisdictions don't like churches owning houses because they cannot charge property tax.
Many pastors prefer to find their own housing. So the IRS decided that a housing allowance equal to the value of providing a parish house would be allowed. This way pastors could buy homes and build equity, local government would be able to tax such properties (since they do not belong to a not-for-profit organization — church), and churches would not have the problems associated with owning a house.