Nathan A. "Nate" Adams IV is a Partner in
our
Tallahassee office.
Timely Topics
A federal district court has ruled unconstitutional one of the
most important tax benefits available to ministers: the
minister's housing allowance. A summary of the case follows.
The ruling threatens to have a dramatic effect on how churches
compensate ministers. An estimated 44,000 ministers, priests,
rabbis, imams and others use this allowance. The tax exemption
permits them to exclude eligible expenses from income for federal
income tax purposes, up to the fair rental value of the home when
designated in advance as a housing allowance. Eligible expenses for
homeowners include mortgage payments (principal and interest),
property taxes and insurance, utilities, appliances and furniture
(purchase or rental cost and repairs), and structural repairs and
remodeling. Alternatively, eligible rental expenses include rent,
furnishings, utilities and insurance. In aggregate, the
