How does a church owned parsonage benefit a pastor?
When a pastor lives in a church owned parsonage its value is considered a part of his housing allowance and is automatically free from income tax*. In addition, a pastor does not pay federal income tax on that portion of his cash income which is considered to be his housing allowance.
*Housing allowance (parsonage value, utilities paid by the church and designated cash portion) is always subject to social security and Medicare taxes.