Multiple Residences and Housing Allowance

by Steve Merriman, EA

The Appeals Court ruled on the Driscoll case (CA 11 2/8/2012) 109 AFTR 2d, regarding housing allowance deductions on multiple residencesstipulating that the clergy housing allowance can only be used for a primary residence and no more than one residence at a time.

The Appeals Court reversed the Tax Court decision that allowed a parsonage allowance on multiple residences.

As odd as it sounds and disappointing to some, this ruling may be in the majority’s best interest.  Allowing housing allowance deductions on multiple residences has the potential for great abuse and could therefore  jeopardize the housing allowance in the long run. Clergy housing allowance is one of the most valuable tax benefits ever.  As such, it must be properly protected, valued and implemented.

If you are planning to move from one home to another or reside in more than one place or home at different times of the year, you may still switch your housing allowance to whichever home is your primary residence at the time. That means that housing allowance may be claimed on different homes in the same year, provided they are used one at a time for deductions. But in any event, if you are planning to buy or sell a home, you need to speak with a qualified clergy tax planner, anyway. It could mean saving a lot of money using your housing allowance benefits.