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.

 
Attention: Tax Law is subject to interpretation. Please be advised that the material contained on this Web site is for information only and is not intended to be a substitute for professional legal advice. The Stewardship Services Foundation endeavors to update the information on this site on a regular basis, but cannot guarantee its accuracy at all times.