Pastor's Housing Allowance Etc

[spencer]

A PASTOR MAY KEEP TRACK OF HIS PERSONAL LIVING EXPENSES IN AN ATTEMPT TO MATCH OR EXCEED THE CHURCHE'S HOUSING ALLOWANCE OR FAIR MARKET RENT. ONE ITEM IS "REMODELING AND IMPROVEMENTS" HOW
EXTENSIVE CAN THAT BE? lIKE $12,000 FOR A NEW BATHROOM? tHANKS FOR YOUR COMMENTS

[thomtax]

The thing to keep in mind is that the housing allowance write off is the lesser of the amount spent or the fair market rental value of the home. From my reading, this is interpreted by many as being the house plus furnishings. So if the remodeling exceeded this, it would run into the cap.

LT

[MAMalody]

The housing allowance is the lower or (1), the amount designated, (2) the amount spent or (3) the FRV plus a few odds and ends like utilities. Remodeling expenses would qualify as housing expenses, however, they may not prove to be a benefit if he either did not adjust the amount designated or it exceeds the FRV.

[spencer]

Clergy Housing Etc

The housing allowance is the lower or (1), the amount designated, (2) the amount spent or (3) the FRV plus a few odds and ends like utilities. Remodeling expenses would qualify as housing expenses, however, they may not prove to be a benefit if he either did not adjust the amount designated or it exceeds the FRV.

Thank you thomax and MaMalody. The answer then, I believe, is that extensive remodeling expenses are allowable. That would probably insure that the lesser of FRV or amount designated would apply.

[Burke]

The housing allowance is the lower or (1), the amount designated, (2) the amount spent or (3) the FRV plus a few odds and ends like utilities. Remodeling expenses would qualify as housing expenses, however, they may not prove to be a benefit if he either did not adjust the amount designated or it exceeds the FRV.

What other "odds & ends" would qualify? It is my understanding that FRV is calculated as if the house/apt is furnished which would be higher than unfurnished.

[MAMalody]

I never know what people may or may not include in the definition of Fair Rental Value so I always indicate it is the fair rental value of the home, including furnishing, utilities, garage costs, insurance, etc. (I think this is the way the IRS also explains it in Publication 517.)