Churches can designate a housing allowance for a minister who lives in a parsonage if the minister pays for utilities, repairs, furnishings or other eligible expenses. Ministers who live rent-free in a church-owned parsonage should not include the fair rental value of the parsonage in income for federal income taxes. But they should include the fair rental value of the parsonage in income for SECA taxes.

Ministers who live rent-free in a church-owned parsonage may exclude the lower of these two amounts:

1. The housing allowance designated by their church; or
2. Actual housing expenses not paid by the church (including utilities, furnishings, repairs and improvements).

For more information, visit the Ministers' Tax Guide