This is an excerpt from The Pastor’s Wallet Complete Guide to the Clergy Housing Allowance, now available for purchase on Amazon.
Everyone wants a clear list of what is permissible and what is not allowed for the housing allowance. Unfortunately, that is still being figured out. Right now it just allows “expenses directly related to providing a home” and only specifically prohibits food and servants. That clear-cut list that everyone wants is still out there somewhere with unicorns and the Easter bunny. Good luck finding it.
The specifics that we do have come from IRS rulings and case law. There are a few things that have been decided for sure qualify or don’t, but the thousands of other possibilities out there simply have not been addressed by the IRS yet.
How To Determine What Qualifies For The Clergy Housing Allowance
There are only three ways to find out for sure if something qualifies. You can:
1. Get the IRS to issue a private letter ruling regarding your specific situation. These can cost hundreds of dollars and are difficult to obtain.
2. Speak to a subject matter expert at the IRS. Since pastoral tax issues are very unique, people often receive conflicting advice when talking to government agencies. Make sure to get any information you receive in writing so you can use it to back up your claims if later opposed.
3. Get audited and take the IRS to tax court.
Do any of those options sound like fun to you? Me neither. You can see why we don’t have a clear list of allowable expenses. The best you can do is apply wisdom and prudence to your decisions and accept the fact that you won’t know anything for sure unless you end up in court before a judge. Personally, I would take the ambiguity over the audit any day.
Even though there is a lot that we don’t know for sure, there is still some that we do know. Pretty much anything that is used to provide or maintain a home and is not specifically forbidden is allowed. Even the little things that make a house a home, like a framed copy of your favorite scripture verse. Here is a list to get you started.
Allowed Housing Expenses
- Mortgage principal and interest payments
- Mortgage down payment and closing costs or home purchase price
- Rent
- Real estate taxes
- Homeowners or renters insurance
- Homeowners association dues
- Condo fees
- Home improvements
- Structural maintenance and repairs (roof, paint, deck)
- Upkeep of the home and its contents
- Utilities: heating, electricity, water, sewer, garbage, gas, basic home telephone, internet
- Cable TV
- Furniture (purchase, repair, and replacement)
- Appliances (purchase, repair, and replacement)
- Dishes and cookware
- Decorating items such as pictures, rugs, mirrors, curtains
- Bedspreads, sheets, and towels
- Yard care tools: lawnmower, shovel, fertilizer. etc.
- Yard services: snow removal, tree trimming, landscaping and gardening
- Pest control
- Cleaning supplies, paint, and light bulbs
Not Allowed
- Groceries
- Servants
- Maid service
- Personal items
- Personal gifts
- Paper products (plates, napkins, etc., not toilet paper)
- Personal toiletries
- Personal clothing
- Cell phone service
Someone once asked me if a storage unit used to hold household furnishings would count towards the housing allowance. I don’t know for sure, but my guess would be no. The housing allowance allows for garages, but the understanding is that they are on the same property as the house. Storage units are separate buildings in separate locations. Past court cases have shown us that the IRS doesn’t approve of claiming two houses in two locations at once.
The Pastor’s Wallet Complete Guide to the Clergy Housing Allowance also includes eligibility information on down payments, home equity loans and lines of credit, cash-out refinances, prepaid expenses, home businesses, and clergy couples. Purchase it today on Amazon!
42 Responses
Jeff Pospisil
March 9, 2020I like the “Not allowed” section. I’ve always just listed the “Allowed” ones. Last year, one of my clergy tax experts who follows Hammar notified me that basic cell service was allowable. I know that these have not been allowed in the past, but I wonder if that was challenged and change recently.
Amy
March 11, 2020Jeff, my understanding was that if it was attached to your home (land line) then it qualified and if it wasn’t (cell) then it didn’t. I will look into that further.
Eric Prenshaw
March 10, 2020This is so helpful, thank you! Where do paper towels fall? Is that considered a cleaning supply (allowed) or paper product (not allowed)?
Amy
March 11, 2020Eric, I don’t think there is a definitive answer on the topic. The only way to get a definitive answer for most things is if a pastor claims it, the IRS denies it, and they go to tax court. So, you’ll just have to make your own judgement call.
Trevor
March 25, 2020thanks for posting this, what about computers, desktop/lab-tops, or ipads.
Amy
March 29, 2020Trevor, from what I’ve seen, a desktop computer would qualify, just like a landline telephone. However, laptops and iPads, or anything portable like a cell phone, do not qualify.
Ana
January 3, 2024What about a swing set or other outdoor playground equipment for kids?
Amy
January 22, 2024That’s one that isn’t specifically addressed anywhere, but as long as it’s on the same property as your home I would feel comfortable claiming it as housing expense.
Paul Edwards
April 10, 2021My wife is bed is ridden with Multiple Sclerosis. I had a serious fall last June, fracturing by hip and bone holding it up. I am bed ridden a well. I will be on my walker for quite some time. Cooking, serving dinners, cleaning floors, rugs, and daily dishes and clothes are not possible. If we cannot hire help our house will be in shambles.
Can we claim the salery for caregivers to run the house as I am completely unable, as obviously is my wife.
Amy
April 12, 2021Paul, what you describe would probably be considered a medical expense and not eligible for the housing allowance. Servants and maid service are specifically excluded from housing allowance eligibility. If you hired someone to do home or yard maintenance, that would qualify. I’m sorry to hear that you are going through this!
Rev. Hugo Manuel Otaola
July 22, 2021I have a question: does Housing Allowance apply to retired pastors?
Amy
July 22, 2021Retired pastors can claim a housing allowance, but only from a church retirement plan. Money from an IRA cannot count as a housing allowance but money from a church pension or 403(b) can. https://pastorswallet.com/take-ministerial-housing-allowance-retirement/
Brenda
July 26, 2021Would a small tractor for taking care of a gravel driveway, plowing snow, turning compost, taking down trees, etc.. be allowed under housing allowance? The tractor would cost between $3,000 – $4,300. We have 11 acres of land and would be extremely helpful in taking care of the property.
Amy
July 28, 2021Brenda, this is an area that is not directly addressed by the IRS anywhere so you have to make a judgment call. The housing allowance is supposed to be expenses used to provide a home and that has traditionally included things like lawn care, rakes, shovels, etc. It is understandable to think that would extend to larger equipment used to manage property, though that is not stated anywhere. I approach questions like this with, “Do you feel you could make a case for this in tax court?” If the answer is no, then you probably shouldn’t do it. If the answer is yes, then make whichever decision you are comfortable with. The only way to know for sure would be to claim the expense, have the IRS disallow it, contest it in court, and let a judge decide.
Salim Banbahji
November 22, 2021Hi Amy,
Im paying a down payment and closing cost will be 200k and more. Can I have that as my housing expense or do I have to look at fair rental price that can be much less because it’s not a down payment that costs significantly greater.
Basically do i look at fair rental o year that paying down payment too or only years with mortgage and rental.
secondly, wanted to know what you thought. i am a minister as a bivocational job. Is opting out so bad if i will be getting it from somewhere else (i.e. my other job)?’
by the way you are amazing.. the website is fantastic!!
Amy
November 26, 2021Salim,
Even in the year you make a down payment, you are still limited to the fair market rental value of the home. Because of that, you likely won’t be able to claim the entire down payment.
As for Social Security, opting out is supposed to be based on religious convictions and the IRS makes it very clear that you are not allowed to opt out for economic reasons. I don’t know your heart, so I cannot comment on what you should do. I can tell you that Social Security benefits are calculated based on earnings, so if only your secular income is subject to Social Security and not your ministerial income, then you will end up with a lower retirement benefit than if you didn’t opt out.
Thank you for your encouragement, I’m so glad you have found the website helpful!
Hkbyrd
March 1, 2022We added an additonal bathroom in the attached garage. Then in the same year ended up moving. Can we claim the exspenses for the tax year we did the addition?
Amy
March 1, 2022Hkbyrd, yes you can.
Hkbyrd
March 2, 2022We have actually turned the previous house into a rental now. Would the housing claim still apply? We lived in the house during the renovations. But did end up moving by the end of 2021.
Amy
March 4, 2022If you did the addition before you turned it into a rental, then that qualifies. Once the house became a rental, you started using it for “business purposes” instead of as a home and it is no longer eligible for the housing allowance.
Hkbyrd
March 5, 2022Thank you 🙏just received my book in the mail…..can not wait to devour it!!
Amy
March 6, 2022Thank you, I hope you like it!
Roymond
April 14, 2022I’m getting conflicting advice about whether payments on a home equity loan count: one says no, just the actual expenses for repairs count; another says only the interest on the portion of the loan used for home repairs counts; another says the payments and interest for the portion of the loan used for home repairs counts.
I’m thinking it’s probably the first one, but wanted to ask!
Amy
April 24, 2022Home equity loans are usually treated like mortgages. If the full balance of the loan was used for housing, then the full payment is eligible for the housing allowance. If only a portion was used for housing, then only the corresponding portion of the payment is eligible.
Roymond
April 15, 2022Okay, this came up in a discussion with some folks online: it says cable TV counts, but what about its competition — Netflix, Disney, and the rest?
Amy
April 24, 2022The IRS hasn’t addressed streaming services but personally I think that they should count if cable TV does. I always ask myself, “Could I argue this in tax court?” for things that are unclear such as this. If you are confident you could make a good case for it, then go for it. If you’re not confident, then you’d better play it safe.
Jody Walter
January 5, 2023When I graduated from seminary last millennium, vestments, including clergy shirts, were an allowed housing expense. Is that still the case or has that changed.
Lisa B
February 12, 2023What is the latest on whether cell phone service qualifies as part of the housing allowance?
Laura
November 29, 2023We have a garden, that we use for flowers, herbs and vegetable plants. I see in different places that we can include things having to do with landscaping and gardening tools, but we don’t really invest in just making the yard right around the house pretty. We invest more in using it for practical purposes, and we love home grown veggies. I know we can’t include groceries, but part of what our garden does is provide us with food. However, it’s also full of flowers and beauty. This year, we had to put up fences because the deer would eat anything that they could get to. We buy seeds, fertilizers, pest control items, hoses and irrigation parts, garden tools, soil, compost, pots, and other items like trellises for climbing/vining plants. Can these kinds of things be included?
Amy
December 1, 2023Laura, this isn’t spelled out anywhere so you’ll have to make a judgment call. I would probably be comfortable claiming it since it’s basically yard care/supplies. You just happen to eat out of your yard.
Laura
December 1, 2023I was kind of thinking the same thing and hoping I was on the right track. Thank you for your reply! That helps me a lot!
Amy
December 1, 2023Glad to be able to help, Laura!
Jayne
November 30, 2023My husband and I bought a property with 10 acres that will require a tractor to maintain the pastures as well as plow the driveway during snowy winters. Does such equipment qualify?
Amy
December 1, 2023Jayne, if you’re using the pastures to generate an income, then it would not qualify. Otherwise, it isn’t spelled out anywhere in the law so you will have to make a judgment call. The way the law is written, it talks of tax-free income “to provide a home.” Personally, my home doesn’t require a tractor but I understand that yours might. If you can’t live in your home without a tractor to plow the driveway, then I would be comfortable claiming it as an allowable expense. (This isn’t even the first time I’ve gotten this question!)
Barry
January 22, 2024Just wanted to clarify—it says “not toilet paper” in the not allowed section, so is toilet paper an allowable expense?
Amy
January 31, 2024Yes, toilet paper is allowable.
Val
January 30, 2024Thanks for this helpful information. We also wondered about the TP question – Not not allowed, meaning not excluded?
Also, what about home management & organization systems, decluttering helps…?
Regarding the pastor’s cell phone, we have a resource from our clergy tax service that says it is not eligible for Housing Allowance – only land line – but is eligible for Professional Expense, usually on a prorated basis if not used 100% for ministry. They provide suggested options for how to determine the % of ministry usage and once determined, you use that % of the monthly phone expense for that year. It can be recalculated in subsequent years or the same % could be used. Hope that helps to clarify some.
Thanks again for your site!
Amy
February 1, 2024Yes, I didn’t write that clearly. TP is not excluded but paper goods like paper plates and napkins are. I would think that organization systems should qualify.
Thanks for sharing that suggestion regarding cell phones!
BTall
February 12, 2024Val, where are Professional Expenses such as cell phone calculated and deducted? When I do an online search, I am not finding much helpful information.
Cecilia Morse
April 20, 2024Can I include printer ink in my house expenses? All the information provided here is very helpful.
Amy
April 21, 2024That isn’t specified anywhere, but if the IRS says that a desktop computer qualifies then I would be comfortable claiming printer ink.
Cecilia Morse
April 22, 2024Thank you Amy. Our printing is usually unrelated to our home, but so is our use of our desktop computer, and you pointed out, that’s allowed.