Church Finances and Business: The Housing Allowance Is Only for One House

In Commissioner v. Driscoll (not Mark Driscoll of the Mars Hill Church in Seattle fame), the federal Court of Appeals for the Eleventh Circuit ruled that a minister may claim the housing allowance exclusion for only one house.

This is surely the correct result. I can’t imagine that Congress ever meant to grant a tax exclusion for vacation homes and beach houses, just because a preacher happens to be the owner.

Those ministers with summer homes and mountain-top condos don’t really need a taxpayer subsidy to help with the mortgage.

Finally, I’m delighted with the decision because it eliminates an abuse of the system, and therefore eliminates a reason for Congress to revisit the law. After all, Congress might just reconsider the exclusion altogether.

About Jay F Guin

My name is Jay Guin, and I’m a retired elder. I wrote The Holy Spirit and Revolutionary Grace about 18 years ago. I’ve spoken at the Pepperdine, Lipscomb, ACU, Harding, and Tulsa lectureships and at ElderLink. My wife’s name is Denise, and I have four sons, Chris, Jonathan, Tyler, and Philip. I have two grandchildren. And I practice law.
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39 Responses to Church Finances and Business: The Housing Allowance Is Only for One House

  1. laymond says:

    I agree on just about everything you said, except I believe congress should revisit the exclusion laws for church property. If church property was taxed just as private property is, it might lower the incentive to sin. And there is no reason to tax a preacher’s property any differently than the pew sitter’s. Yes I believe charitable giving should be tax free to encourage the rich to do what they should on their own, but that said a person who gives to receive a tax break , might as well keep it in his pocket. Yes if the parents of Jesus were subject to taxes, why not the children of Jesus.? I always gave cash (very few times we wrote a check, then only when we were short on cash) and never took a charitable deduction on tax, why? because I believe that is the way to give, without recompense.
    Thanks Jay for letting me get that off my chest 🙂

  2. Robert Baty says:

    Senator Grassley provided the reason for Congress to revisit the income tax free ministerial housing provision of the Internal Revenue Code, but he deferred taking any action in order to allow a religious think tank to think about it for a few years.

    Senator Grassley’s commission identified a number of problems with the allowance, including abuses such as Driscoll made clear and the constitutional problem.

    Congress and the President have currently shown no interest in legislating any cure for the abuses or deal with the constitutional problem.

    The Freedom From Religion Foundation challenge to the constitutional issue in federal district court will, perhaps, resolve all the problems.

    The Government filed its Answer to the FFRF on Friday, February 24, 2012, with a Motion to Dismiss. My simple analysis of that issue can be found in the readers’ comments section of the following column:

    Jay, your professional opinion regarding my layman’s analysis will be appreciated.

  3. Sam Loveall says:

    I understand and have no problem with the decision. It would be extremely helpful for me personally if it had come down differently, because my wife and I own two houses. Not because we want to, but because we haven’t been able to sell the one we left in March 2008 in a change of ministry. The change came because of being laid off from the financially-strapped Bible College where I was teaching.

    Our second house isn’t a vacation home or a retreat in the mountains. It’s an albatross around our necks, and a burden in our lives. We’d love to be rid of it, but likely won’t be until the housing market recovers significantly. And it isn’t entirely because I’m a minister that we own it – – it also has to do with losing a job just a month or two before the housing market crashed and burned – – but if I wasn’t a minister, we wouldn’t own it, because we wouldn’t have been in a position to either buy it or leave it.

    So the relief of the “second home deduction” would be gratefully accepted, but I know it can’t and won’t be. Like so many other folks in financial straits because of housing these days, today, that’s just how life goes sometimes.

  4. Robert Baty says:


    You might want to ask Jay about it, but if you don’t live in Driscoll’s circuit you could argue that you are entitled to the exclusion for more than one house.

    Also, it’s not over until its over even in Driscoll’s circuit. While the Appeals Court said “no”, that decision is subject to a review “en banc” and even from there there is the Supreme Court. The Faith and Freedom folks are making like they want to pursue the appeals and make Driscoll’s cause your cause and a cause for all the little people (ministers) with more than one house.

    It could be awhile before the issue is laid to rest regarding the second home issue.

  5. Charles McLean says:

    I’m sorry, Sam, but your two-house difficulty is shared by many people. But FAR more people are having trouble holding onto the one home they have. If I can’t find sympathy for a tax break available to people who teach in Bible School, but not to those who teach in a community college or an urban elementary school, please forgive me.

    The tax deduction was always intended to help ministers with the cost of housing his family, not to assist a person with his real estate investments.

  6. Sam Loveall says:

    Charles, perhaps you got the wrong idea from what I wrote. I am not looking for or expecting assistance with real estate investments. I have been and continue to be a minister trying to house his family. I haven’t made any real estate investments, beyond buying a house to live in at what were at the time reasonable market values, losing a job because of other people’s poor money management, and having to buy another house in another city to live in.

    And I’m not looking for sympathy or a pat on the back and a “Hang in there, buddy!”, either. I tried to make it clear that I wasn’t hoping for the law to change, or expecting any such thing.

    So no forgiveness needed. Blessings to you.

  7. Robert Baty says:

    > Brooke Asiatico, the Driscolls’ lawyer, said the Driscolls
    > will petition for a rehearing before all the judges on the
    > Eleventh Circuit.
    > “We are committed to fully exploring all
    > appeals for Minister Driscoll,”
    > she said.
    > “Because this is a case of exceptional importance
    > applicable to all clergy in the United States,
    > the Faith & Freedom Fund, a non-profit legal fund,
    > will continue to provide legal support for this
    > issue moving forward,s”
    > she added in a press release.

    Jay Starkman, CPA, attended the 11th Circuit hearing in the Driscoll case and wrote, in part:

    > “The real news in the press release is
    > that this is supported by some legal fund.”

    Shades of Rick Warren, though I doubt the horn-playin’, tax-cheatin’ Phil Driscoll is going to have the same draw that Rick Warren did.

    We’ll see!

  8. Peter Reilly says:

    Much of the abuse of the parsonage exclusion could be remedied with a dollar limit. As far as being stuck with two houses goes, I’m in that boat too. I converted the one I don’t live in to rental which should make all the expenses ultimately deductible.

  9. Robert Baty says:

    For those interested in Phil Driscoll’s apologetic for his tax shenanigans, and other related matters, see:


    It has the following relative to the Faith & Freedom Fund that is pledged to continue the appeal of his housing allowance case:

    > Editor’s Note: Phil’s lead counsel, Brooke Asiatico,
    > has formed the “Faith & Freedom Fund,” which is a
    > tax-exempt legal defense fund which will be used in
    > defending this and other similar court cases.

  10. Charles McLean says:

    When I hear the word “ministry” (which once meant “servanthood”) used as a key to access financial advantage over those whose work is less sanctified—say a policeman or a firefighter or a nurse—then I and others watching begin to wonder who is actually being “served”. It is a blindness of the first water to conflate servanthood with a millionaire touring musician flying a Cessna Citation so that he can avoid the inconvenience of commercial air travel. Unfortunately, the continuing scrabble for advantage suggests that such blindness is not limited to Driskoll or his friends.

    As to the “Faith and Freedom Fund”, it makes it hard to make the word “faith” meaningful among unbelievers while they watch Christians battle to maintain or expand their financial privileges, using the same word to describe their own efforts.

  11. Robert Baty says:


    I don’t remember if you were in on the old discussions here and elsewhere, but since you mentioned “ministry” in contrast to such work as done by “policemen, firefighters and nurses”, I just gotta mention that one of my hobbies has been to be quite critical of our private school brethren who have exploited the housing benefit by granting such allowances to “basketball ministers”, “math ministers”, “economics ministers”, ad nauseum.

    That matter, of course, was the primary subject of the following two recent Forbes columns:

    It also forms a case study as to the unconstitutional claim by the FFRF in its Complaint (paragraph #38 I think).

    We have George H.W. Bush and Omar Burleson to thank for that, along with the private school brethren who sacrificed the institutional “conscience” in order to get the Federal Government to recognize the schools as “integral agencies” of the church.

    “Conscience” might be claimed to be a big deal with reference to ObamaCare and birth control, but it was easily compromised so the “basketball minister” could get his income tax free housing allowance.

  12. Jerry says:

    The exemption of housing allowance from income tax (but not from self-employment tax) began during the era in which most preachers lived in a church-owned home provided for them as part of their compensation. Due to the first amendment, churches cannot be taxed directly, as the power to tax is also a power to confiscate. This would empower the government to “prohibit the free exercise thereof” through the power of taxation.

    That is also why preachers must pay self-employment taxes instead of being subject only to the employee share of F.I.C.A. while the employer (i.e., the church) pays the employer’s share. The government cannot tax the church; ergo, they make the preacher pay the entire assessment of the payroll tax.

    When many preachers began buying their own homes instead of living in “the manse” owned by the church, in fairness to them, they were exempted from income taxes on a housing allowance.

    The system is abused, no doubt. Preachers are flawed sinners as are all others – and will take every financial advantage they can get. However, I recognize that the difference between tax avoidance and tax evasion is time in prison.

    Laymond, even Jesus said “Give to Caesar what is Caesar’s and to God what is God’s.” If Caesar says I do not owe him taxes on what I give to God, I do not owe him taxes on what I give to God – and to have more to give to God, I will claim every legal deduction available to me (and take advantage of every legal exemption) to avoid, but not to evade, taxes. Financially, it is better to pay taxes on $1,000 of income than it is to donate $1,000 and claim a tax deduction. Even “rich” people give for more benevolent purposes than merely to gain a tax deduction.

  13. Charles McLean says:

    Robert, we have come a long way from “your money perish with you!” To quote Mississippi Bible salesman Big Dan Teague, “It’s all about the money, boys!”

    As I understand it, the original parsonage tax exemption was limited and rather reasonable. It was envisioned to help poor ministers who received housing as a significant part of their overall compensation. When a minister received a small salary, and lived in the parsonage, it was deemed a serious burden for him to have to pay taxes in cash from that small salary on the in-kind value of the parsonage. Some thirty years later, Congress responded to the complaints of clergymen who were left out of this tax break when they got a cash “rental allowance” in lieu of a parsonage. The tax exemption then grew to include home-owning ministers who got a “housing allowance” which also covered the monthly costs of the home of they owned.

    Soon, independent religious businessmen –itinerant evangelists, writers, banquet speakers, even entertainers like Driscoll— started setting themselves up as 501c(3) non-profit corporations with self-appointed boards and granting themselves such housing allowances to shelter part of their income. Then, these folks started claiming the tax exemption for more than one home. This growing “exemption creep” finally got so egregious as to get the attention of the IRS, when a trumpet player in a $2 million private jet claimed to be entitled to a preacher’s housing tax exemption on his lake house as well as on his main residence. I cannot think of a direct biblical quote which is apropos, but “give ‘em an inch and they’ll take a mile” does come to mind.

    But this is America, where greed is apparently no longer one of the Seven Deadly Sins, but part of the religious program. We used to put on sackcloth in response to sin in the church; now we just get better lawyers. If I sound cynical, well, seeing some real change about the church and money just might be a good treatment for my disorder.

  14. Gregory Alan Tidwell says:


    I deeply appreciate your efforts to highlight best practices regarding the tax situation for preachers.

    Some of our ministers are clearly dishonest, wanting to circumvent the law, while others are ignorant. Most, I believe, sincerely want to follow the law, but even to professionals it can be confusing.

    Many thanks for providing good information on this subject.


  15. Sam Loveall says:

    Well, then, Charles, please note this: When my wife and I moved to that I could join the faculty of a very small Bible college, between the two of us, we took more than a $26,000 annual pay cut, so that I could help train a very small number of future ministers for their service in the church. Having moved from a small church ministry position to do that, there wasn’t all that much to take that pay cut from in the first place. two-and-a-half years later, when the financial problems at the college became painfully evident, we had to leave there and move across the state to find another ministry position. So we have two houses now, not because we’re Phil Driscoll and building a ifnancial empire through which to take advantage of the church, but because we’re trying our best to follow God’s call.

    Again, not looking for sympathy. Just expressing frustration.

  16. Robert Baty says:


    Glad to see we’re apparently in the same “cynic” club.

    I would just like to point out that you left out the private school men in your list of folks who, since Bush and Burleson put the squeeze on the IRS for official, government recognition that their private schools (e.g., Pepperdine, Abilene, Harding, Lipscomb, et al) are operated as “integral agencies” of the church, have been lining up along with their “basketball ministers” and other employees to claim the income tax free housing benefit.

    I claim that is contrary to the facts and the law, but as currently administered, its allowable.

    Hopefully, the FFRF suit will bring an end to such things. If not as a result of a Supreme Court decision in the case, perhaps indirectly as a result of bringing attention to the issue where Grassley, his commission, the Congress, and the President refuse to act.

  17. Todd Collier says:

    God bless you Sam, my family has been in the same position for the past two and a half years. The job in one city ended just as the real estate market collapsed and what had been a smart purchase in ’06 became a serious liability in ’09. The new job was 1,300 miles away and we’ve been renting since. Thankfully the situation is now resolving itself.

    I never had the chutzpah to claim expenses for both houses aside from the partial year in either place. Working opposite the IRS in a former life makes me kind of cautious on such things.

  18. laymond says:

    Charles said, “But this is America, where greed is apparently no longer one of the Seven Deadly Sins, but part of the religious program.”

    As so many on Jay’s comment sections have told me over and over, (you could have been one of those) “you can’t live with out sin,” if you preach that long enough people begin to think “why try” as was asked of Paul, why not sin more to give more glory to God when he forgives that sin, what glory is there in forgiving sins that are bearly sins anyway? By the way can you show me in scripture where it says a Christian cannot live without sin?

  19. Sam Loveall says:


    I truly wish we had had the good sense to rent in the college town, rather than buying at the top of the bubble. Of course, at the time we didn’t expect to be leaving 30 months later. But then, (fans of the 1980’s St. Louis Cardinals will recall Joaquin Andujar’s one-word philosophy of life), yaneverknow.

    We never tried to push the IRS on the issue. Didn’t reckon it was worth the effort, or the flack. We just worked out what the law is, and live with it, and find other ways to economize. We recently began to rent the house out, so at least now we have some tax help connected to that.

    Anybody moving to Elizabeth City, NC, any time soon? I know where you can find a great home for your family.

  20. laymond says:

    Sam, I believe that is in the bible as well don’t plan on tomorrow, yaneverknow
    only God knows for sure. — I have never understood why, a preacher would sigh a thirty year mortgage with a three year job security — I really have never understood why a bank would get involved in that transaction.
    In my opinion a preacher buying a house is liken to a soilder buying a house at every base he is stationed at. He knows he won’t be there that long, or he should.

  21. Sam Loveall says:

    Laymond, I can only speak for myself, in this way: Every time I move to a new place, i expect to retire there, and I live as though I will, until I know that I won’t. Living and working in a place as though I expect to be leaving soon leads me to be hesitant to try to set down roots, to develop deep and abiding friendships, to become deeply involved with the people in the area, or even in the congregation. I found that I can’t live in a ministry like that. I have to be all in, or not at all.

    I’ll continue to expect that God will care for me, even when the struggle gets tough. And, as before, I expect to retire where I am now.

  22. laymond says:

    “I expect to retire where I am now.”
    I hope you get to Sam, if that continues to be what you want.
    But if I had chosen your line of work, I wouldn’t take out any thirty year mortgage 🙂

  23. Sam Loveall says:

    Well, we actually do 15yr mortgages, but the problems are similar. 🙂

  24. Todd Collier says:

    Laymond, I know you mean well, but it is members with attitudes such as you display that make our work such a “joy.” Believe it or not some things do change with time. Most of the elderships I have interviewed with over the past decade have been big on pointing out their “long term” intent and most congregations that are growing do have settled staff members. The three year hitch is no longer the “norm” but is the sign of either a troubled work, a troubled minister or what I call the “John Adams” syndrome- somebody has to follow Father George, and you will never measure up so don’t expect to hold the job long.
    But those members who treat us as hirelings and temporary help are the sources of our wounds and for the weaker ones the reason they leave the work. Ministry should be all consuming, but it need not be crushing or cruel. “A workman is worthy of his wages” I think that means a decent living wage that is neither so high it breeds envy, nor so low it breeds contempt.

  25. gt says:

    Sam, I hope things work out for you and your family. Dont let the resident curmudgeon here discourage you. I would hope that any minister looks at each place he is employed at as permanent. Thanks for handling those sarcastic comments with such grace.

  26. Charles McLean says:

    Laymond asked: “By the way can you show me in scripture where it says a Christian cannot live without sin?”

    Laymond, I find only one Man who ever did it. If you would point out such an achievement by another believer, either in scripture or outside it, I would be most impressed and might well change my view. But John’s teaching makes me doubt this eventuality, as he says, “If we claim to be without sin, we deceive ourselves and the truth is not in us.”

    I find nothing in the zoology books which says an elephant cannot fly. But, after looking at elephants and noting that none has yet been seen to fly, I feel this is a safe assumption to make. When the first elephant lifts off unassisted, I shall most certainly repent of my position.

  27. laymond says:

    Todd, my attitude has nothing to do with it, the odds and history of the CoC say don’t count on retiring with only one job on your resume, just fact.
    Preaching the gospel, is a sorry job for a married man, ask Paul.

  28. laymond says:

    “If we claim to be without sin, we deceive ourselves and the truth is not in us.”
    Charles I think you might look at what John said in context to what else he was saying.

  29. laymond says:

    By the way Charles, I see you have neve seen “Dumbo”.

  30. Charles McLean says:

    Sam, I respect people who follow the Spirit’s leading, even when when this makes their own circumstances difficult. The idea that if things are hard, perhaps you should not do them, is antithetical to “taking up our cross”. And yes, I had similar circumstances to you many years ago– fired by one church, hired by another in another city and unable to sell my house. I know firsthand how hard it is. My criticism is not directed at folks in difficult circumstances, but at the sense of entitlement I find far too often among clergy. This causes them to see the tax-exmpt “housing allowance”, not as an unusual blessing, but as their due as a servant of God, and something they are entitled to fight to keep. Gehazi comes to mind.

    I am also ashamed of those who would finagle the definitions of “ministry” for no other reason whatsoever than for financial advantage. The “associate pastor of strength and conditioning” who works for the “basketball ministry”, and the “executive pastor” who is actually the organization’s CPA and tax lawyer make fools of us in front of the world. Our pants are down and our cupidity is not covered by the rhetorical fig leaves we have parsed together.

  31. Sam Loveall says:

    On this we can agree, Charles. And having worked for/with a particular Christian musician on one occasion, in the wayback (in a very small and insignificant role), I’m not entirely stunned to have watched the progress of this issue as it connects to what may or may not be his life.

    (Is that vague enough to not be sued?)

  32. laymond says:

    Charles, John plainly says we are to walk sinless after being baptized into the Church. Washed by Jesus’ blood.
    1Jo 1:6 If we say that we have fellowship with him, and walk in darkness, we lie, and do not the truth:
    (if we claim to be Christian, and continue in sin we are not truthful)
    1Jo 1:7 But if we walk in the light, as he is in the light, we have fellowship one with another, and the blood of Jesus Christ his Son cleanseth us from all sin.
    (but if we walk in God’s light/ the knowledge God sent us. we are sinless, I don’t believe John would have told us to do this, if it were impossiable)
    1Jo 1:8 If we say that we have no sin, we deceive ourselves, and the truth is not in us.
    (if we say we don’t need the blood of Jesus because we are already sinless, we accuse God of lying)
    1Jo 1:9 If we confess our sins, he is faithful and just to forgive us [our] sins, and to cleanse us from all unrighteousness.
    1Jo 1:10 If we say that we have not sinned, we make him a liar, and his word is not in us. (this means before we are clensed with the blood)

    1Pe 1:13 Wherefore gird up the loins of your mind, be sober, and hope to the end for the grace that is to be brought unto you at the revelation of Jesus Christ;
    1Pe 1:14 As obedient children, not fashioning yourselves according to the former lusts in your ignorance:
    1Pe 1:15 But as he which hath called you is holy, so be ye holy in all manner of conversation;
    1Pe 1:16 Because it is written, Be ye holy; for I am holy.

  33. Charles McLean says:

    Laymond, instead of telling me about your sinlessness… show me your sinlessness. I’m more of an experiential learner. Thanks.

  34. Charles McLean says:

    Re: Dumbo, I’ll have to give that one some thought,Laymond. Is Walt Disney among the prophets? Hmmm…

  35. laymond says:

    Charles, we are to strive for sinless lives, I didn’t say I was sinless, if I were it would be a waste of time asking forgiveness for my daily sins every night at bedtime. I admit I am not the perfect example to follow in this regard, but my leader is, so I try to follow him. And if it were impossible I don’t believe John or Peter would have recommended we do it. I hope for days that I do succeed.
    And I pray forgiveness on those days when I don’t.

  36. Charles McLean says:

    But you didn’t ask me about “striving”, amigo, but about accomplishing it. Big difference. They are not only not the same, but not really even close. Just let a man tell his wife he’s “striving” to be faithful to her and let’s see how she takes it.

    We are all striving, Laymond. But it is only the empowerment of God Himself which makes even the effort worthwhile.

  37. laymond says:

    Charles, just because you, and I fall short does not mean that everyone does.
    My question was where does it say that everyone always falls short of God’s expectations.

  38. laymond says:

    One last thing Charles, when we strive to become perfect, that is a confession that we know we are not.

    Jam 2:20 But wilt thou know, O vain man, that faith without works is dead?

  39. Doug says:

    To me, this is a no-brainer. As Christians, we are to be good citizens (Romans 13:1). So we need to be in compliance with the laws and guidelines set by our government and that includes IRS rule compiance. So, I have no problem taking a tax deduction for Charitable giving because that is in compliance with IRS rules. If the rules aren’t clear enough to be sure of compliance, then I’d ask the government for clarification but having been in that exact situation before, I’d guess that the government might not be able to clarifiy the situation for you or else might give you erroneous information. In that case, I think doing what you think is right is okay with the understanding that it may be proven wrong and repayment and penalties might apply. If it is proven wrong, you are under a obligation to obey whatever government ruling might come to you.

    With a tax code as complicated as the US tax code, it is very difficult to ensure proper compliance with the code in many cases and that is just a fact. That’s why we have CPA’s and tax advisors (who are also wrong much of the time). Still, we must do what we think is right and be willing to pay the penalty if proven wrong. With the US tax code, many times there is no absolute truth.

    Having said that, Jay… you do ensure the privacy of your readers, don’t you?

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