How does a pastor estimate his housing allowance?

At the end of the year your cash salary will be divided into “salary” and “used housing allowance”.  When designating a housing allowance your goal should be to guarantee you will be able to claim all of your out of pocket expenses as housing.  If your housing allowance designation is too low you will be stuck with this lower amount even if your expenses exceed it.  In addition, you do not want your housing allowance designation to be so close that if you have an unexpected expense it will not be covered.  Designate your housing allowance with a buffer built in because it is always good to have some unused housing allowance at the end of the year.

The following form may be used to help a pastor determine what amount of his salary he would like designated as housing allowance.  Always overestimate, the amount a pastor cannot justify as being spent will be declared as income. It is important to keep accurate records of expenditures. The housing allowance can be amended in mid­year, but the housing allowance is never retroactive.

Name of church  __________________________________________________

Position held _____________________________________________________

Housing allowance for the coming year of 20___. I expect to incur the following expenses to rent or otherwise provide a home. I understand that my actual expenses are what I will deduct on my next year’s tax return, and I will not be allowed to deduct any expenses not estimated and designated officially.

Amount Item
Rent or payments on purchase of a house including
down payment, principal payments, interest, taxes,
and improvements
Furnishings and appliances $_____________
Utilities $_____________
Other housing expenses (cleaning supplies, etc.) $_____________
Miscellaneous repairs $_____________
Total $_____________


Date ________________

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.