It is not unusual for a minister to own two homes. He may be living in one home and buying another for retirement purposes or he may have lived in one home for a particular pastorate and bought another home when he assumed a new pastorate. In addition, a pastor may be living in the church-provided parsonage while buying his own home.
The question that arises is whether the minister can claim a ministerial housing allowance (or parsonage allowance) for both homes. Section 107 of the Internal Revenue Code answers this question with an emphatic no!! In plain English, the tax code prohibits a minister from claiming the housing allowance on any home other than the house that he occupies as his “dwelling place.” A close review of the tax code and the regulations surrounding the ministerial housing allowance singly support the conclusion that the allowance can only be applied to the expenses associated with one home – and one home only.
Therefore, a minister living in his own home as a pastor of a local church, while at the same time buying another home to serve as his retirement home, could only claim the housing expenses associated with the home he is living in towards the exclusion for ministerial housing allowance. Any expenses associated with the retirement home could not be used in calculating the ministerial housing allowance.
Further, if the church provides the minister with a parsonage, he can not also claim the expenses from his own home under the ministerial housing allowance. While it would be helpful in the latter years of ministry if you could live in a parsonage and also began to outfit and operate your soon-to-be retirement home by claiming the expenses under the ministerial housing allowance, the IRS “one home” rule prohibits such.
While some ministers have tried to get around the “one home” rule by claiming that they have two “duty stations,” the IRS has never officially recognized this practice. Simply stated, the IRS rules and regulations make it abundantly clear that for purposes of the ministerial housing allowance a minister can only claim one house and that he must use that house as his dwelling place. There is no gray area for a more open interpretation.