Step 7 - Setup the Housing Allowance

Congress has acted to allow ministers to receive tax-free income

The housing allowance has been in existence for over 80 years. However, many churches today, though aware of its existence, do not know how to effectively implement one for their pastor or ministers. You will be taken step by step through the process of creating a plan that will best fit your church’s needs. In 1921, congress passed the Revenue Act of 1921 that allowed a pastor to have a housing allowance so long as the church owned the home. It did not allow a pastor who owned or rented a home to have a housing allowance. It was not until 1954 that it changed, as stated in section 107(2) of the Internal revenue code, "the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home." Ever since that day churches have been able to design housing allowance plans for their pastors and ministers, which reduces their tax burdens, thus allowing their families to enjoy a higher quality of life. Many people have argued that if one really trusts God to provide, then creating a housing allowance would prove the contrary. I often hear people saying that ministers should not waste their time doing things that show their lack of faith in God’s ability to provide. My answer to that is found in 1 Cor. 4:2 which says, "Moreover, it is required in stewards that one be found faithful." My idea of the word faithful is to make the most of what has been entrusted to you by multiplying it. To pay more income tax than what the laws of the land would require of you, by simply not taking advantage of those laws, is to be a lazy steward who excessively spends what has been entrusted into your hands instead of multiplying it. In Matt. 25:14-30 the two servants that reproduced the number of talents given to their trust, did it by being diligent in the handling of the wealth that was entrusted to them. They purchased lands and rented harvest fields, paid laborers to gather and also invested in banks and were able to generate profits. How do I know that they did that? Verses 26 and 27 tell it all. The Lord said " . . . you knew that I reap where I have not sown, and gather where I have not scattered seed. 27 So you ought to have deposited my money with the bankers, and at my coming I would have received back my own with interest." The Lord was talking to the lazy steward about a common way in which stewards handled money in those days. In the same manner, we must be diligent by understanding the tax laws and knowing how to apply them in order that a maximum result might be derived from the wealth entrusted in our hands.