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Tax.appeal.168
Tax.appeal.168, Tax Accountant
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My husband and I are pastors at a church. We receive a housing

Customer Question

My husband and I are pastors at a church. We receive a housing allowance. Can we have them pay our monthly mortgage payments directly from our allowance? If so, would we be able to claim the mortgage deductions and real estate deductions?
Submitted: 4 years ago.
Category: Tax
Expert:  Tax.appeal.168 replied 4 years ago.
Welcome, THANK YOU for using Just Answer. My goal is to help make your life...a little...LESS taxing.

Q: Can we have them pay our monthly mortgage payments directly from our allowance?

A: Yes, if the church wants to do that they can. As long as you are legal and equitable owners of the property you can deduct the mortgage interest. See the following:

Sec. 1.163-1 Interest deduction in general

(b) Interest paid by the taxpayer on a mortgage upon real estate of which he is the legal or equitable owner, even though the taxpayer is not directly liable upon the bond or note secured by such mortgage, may be deducted as interest on his indebtedness.

REFERENCE SOURCE:

http://www.taxalmanac.org/index.php/Treasury_Regulations,_Subchapter_A,_Sec._1.163-1

Please let me know if I can be of further assistance to you regarding this matter.

Thank you again for using JUST ANSWER.
Customer: replied 4 years ago.
Thank you! I just read that we should be paying self- employment taxes on the allowance. How do I know how much is owed and go about this ? My husband has tax - exempt, I do not. Do we both pay this?
Expert:  Tax.appeal.168 replied 4 years ago.
You are welcome. If you are using tax software, the tax software should calculate this amount for you based on the amount of the housing allowance. Since your husband is exempt, and you are not, only you will need to pay self employment tax. If you're filing jointly, the amount that you will need to pay self employment tax on should be 1/2 the amount of the housing allowance. Following is a link to a Q&A blog that may be beneficial for you to read.

http://www.ngumc.org/news/detail/661
Expert:  Tax.appeal.168 replied 4 years ago.
Hello again,

Checking in with you to see if you require further explanation regarding this matter. If I have fully answered your questions regarding this matter, respectfully, I ask that you rate my answer between 3-5 so that I may be compensated for assisting you. Thank you in advance.