Housing Allowances for Clergy

February 10, 2012

The following information was shared with us from the Legal Department at the General Council on Finance and Administration regarding housing allowances for clergy:

In December 2010, the U.S. Tax Court issued a controversial decision in a case involving the clergy housing allowance. The decision held that a ministerial taxpayer could apply the housing allowance exclusion to more than one home. The IRS appealed the decision to the 11th Circuit Court of Appeals.

On February 8, 2012, the 11th Circuit reversed the Tax Court’s decision and held the housing allowance can only be applied to one home. We won’t bore you with the details behind the fairly short opinion, as the result was not at all surprising. Almost everyone (except for the taxpayer and a majority of the Tax Court!) had thought the housing allowance could only be applied to one home. So we are back to where we were.

This return to the status quo may be important information for any clergy who were planning on claiming an allowance for two homes on their 2011 returns or who requested designations to reflect the cost of two homes for 2012.

If you have questions you may call the Conference Treasurer or ask your personal tax preparer or CPA for further information.