Housing Allowance Designation Report
For Calendar Year
Prepared for the governing board
Concerning the housing allowance of
Generated today
Purpose of This Report
Under Section 107 of the Internal Revenue Code, a minister may exclude a housing allowance from federal gross income — but only if the church officially designates the allowance in advance of payment, in writing (typically a board resolution recorded in the minutes). A designation cannot be made or increased retroactively.
The amount the minister may actually exclude is generally limited to the lowest of three numbers: (1) the amount the board designates, (2) the minister's actual qualifying housing expenses, and (3) the fair rental value of the home, furnished, plus utilities. This report presents the minister's documented figures so the board can set the designation on facts rather than a guess.
The Minister's Documented Numbers
Suggested Designation
Designating on the generous side is the standard practice recommended by clergy tax references: any designated amount the minister does not ultimately exclude is simply reported as taxable income, while an amount the board failed to designate can never be excluded. The suggestion above is a starting point for board discussion — not tax advice. The board should adopt a final amount through its normal governance and may wish to consult a tax professional.
Sample Resolution for the Board Minutes
This sample language is provided for the board's convenience. Adopt it through your normal governance process and record it in the official minutes before the period it covers begins.
Record of Adoption
Adopted by the governing board of ______________________________
on the ________ day of ____________________, ________, and recorded in the official minutes.
Notes for the Board
- Timing is the critical requirement. The designation must be adopted before the payments it covers. A mid-year designation or amendment applies only to compensation paid afterward.
- Designating generously does not cost the church anything. The designation is a label on compensation the church is already paying, not an additional expense, and an unused portion is simply reported by the minister as taxable income.
- The exclusion has an independent ceiling. Regardless of the designated amount, the minister's exclusion is limited by actual qualifying expenses and by the fair rental value of the home, furnished, plus utilities.
- Keep the paper trail together. File this report, the adopted resolution, and the minister's Fair Rental Value documentation with the board minutes.
ClergyTrak is a tracking and documentation tool. This report organizes the minister's records and presents standard designation practice; it is not legal or tax advice, and it does not replace review by a qualified tax professional.