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If you pay personal, family or living expenses for an employee you must include the amount that you paid as wage compensation for that employee.
So, you would include the value that you paid for his personal expenses in his total wages and also in the wages on which the business would pay employment taxes; just as you would if you had given him the cash instead of paying the rent for him.
See http://www.irs.gov/publications/p525/ar02.html#d0e358 for details.
I hope this helps to understand compensation is treated the same whether in cash or another form.