Owning or Living in a Parsonage/Rectory

Owning and using a church parsonage or rectory has both federal and state tax implications for the church and the tenants who reside there.  The rules are not always clear but are essential to understand when planning out the use of these dwellings. We will be discussing the following topics:

Washington State Property Tax:

• Requirements for exemption of the residence
• What happens when the residence is no longer used for clergy or caretakers
• How to establish, maintain, or reestablish tax exemption that has been lost

IRS Reporting & Requirements for the Organization

• When the residence is no longer used for clergy or caretakers
• How to compute and report value of the residence to employees
• Taxation of rental income generated
  • From staff members
  • To outsiders

IRS Reporting & Requirements for Clergy, Caretakers, and Other Staff

• Determining value
• Form W-2 reporting
  • Clergy
  • Caretakers
  • Other staff
• Coordination with housing allowance paid to clergy