In my ministry, I have been privileged to serve as Pastor of four wonderful churches–three with parsonages and one without. When living in a parsonage, I sometimes felt the desire for a home to call my very own. Asking others about drapes, carpets and repairs made me feel like I lived in a nice apartment with a friendly landlord, but clearly had no authority to make the place my own because, of course, it wasn’t. I was thrilled to finally enter the world of mortgages about twelve years ago.
But there is one very significant occasion when living in a parsonage can make a lot of sense, both from the standpoint of the church and the minister. The transition from one ministry to another, with all of its associated hassles, is simplified greatly by the presence of at least one parsonage in the equation–either the church where the minister is departing or the church where the minister is arriving. In such situations, there is only one real estate transaction to manage, rather than two.
Over the past twenty or thirty years, many churches got out of the parsonage business, with the most prominent argument often being that “the pastor ought to have the opportunity to build up some equity of his own.” This philosophy makes sense when I consider the house my father bought in 1970 for $45,000 and sold in 1982 for $120,000. He often told me that was the best investment he ever made. When he went to heaven, I bought a nice house in 2006, anticipating the same kind of real estate opportunity.
The housing market crash of 2008 affected many parts of the country far more dramatically than the South, but nevertheless, housing values are about a third lower than they were previously. The result is that many, many people find themselves underwater, which is to say that they owe less on their house than when they bought it, but they owe considerably more on their house than current market values will permit them to earn in a sale.
Listening to the plight of fellow SBC Voices commenters here, it grieves my soul that one minister would need to sell his library to manage such a transition, or that another would be strapped with taxes due to a short sale. (When your mortgage company allows you to sell your house for less than your mortgage payoff, the IRS treats the difference as income to you and taxes you on it, even though you really didn’t receive any actual money from which to withdraw a portion and pay those taxes. The income is on paper only, but the taxes are real.)
A minister of another denomination in our town was called to a church in Florida, but had to remain here for more than a year before his house sold. Frankly, very few ministers can manage the situation of purchasing two houses at the same time, which is not to say that the problem is limited to ministers. A football coach who moved away from our community did not sell his house until three years later.
Because the housing market today makes minister relocation so much more difficult, and because the dream of affording the minister the “opportunity to earn equity” comes with a nightmare called the “opportunity to lose equity,” perhaps it is time for churches to reconsider the value of the parsonage, for if one exists on either end of the transition, the minister is free to move while only paying one mortgage rather than two.
The church parsonage just might be an idea whose time has come…again.
I am now selling a home that I have owned in another city ten years after moving. It was an inconvenient necessity being a long-distance landlord. However, parsonage can give the pulpit committees tunnel-vision about whom they consider. The housing market will pick up. Let’s not go back to Egypt.
I would suggest possibly renting the house rather than selling it. With today’s economy it is a “renters’ market.” At this point, at least since January 1, 2013, there is a 3 1/2% sales tax on your home that is in addition to paying brokerage and realtor fees.
Three articles (and therefore this goes into moderation) on the subject dating from 2010 to 2012 specifically addressing the Medicare 3.8% surtax:
http://www.bankrate.com/finance/real-estate/new-tax-home-sales.aspx
http://www.factcheck.org/2010/04/a-38-percent-sales-tax-on-your-home/
http://www.smartmoney.com/taxes/income/taxmageddon-may-wallop-home-sellers-1344975382108/
The short answer is that as long as your income is under the 200/250K limit, then the 250K/500K once per two year exclusion on gains from a personal residence fully applies. If you are above that limit (or have used the exclusion in the past two years), then the additional tax rates and the 3.8% Medicare surcharge all apply.
Rick,
I agree. I’ve pastored small churches and have lived in two parsonages. A parsonage definitely has advantages (as well as disadvantages).
If a church is getting a parsonage I’d recommend they get one at least a mile or more from the church. That gives the pastor and his family a lot more privacy than when the house is next door to the church.
But if you are living in a parsonage, that is all the more reason to give to your Guidestone retirement, and if possible be buying some property and / or a small house somewhere. Remember when you are in a parsonage, when you retire, you are out of a place to live.
David R. Brumbelow
Rick,
Here is another problem that we seem to overlook. We have to keep the Pastor’s wife in mind here. I have spoken to about forty Pastor’s wives concerning this very issue. Of the forty wives I’ve spoken to all forty admitted they want a house they can call their own. They want a home, children, and a stable enviroment.
Even though a wife will follow her husband to the ends of the world, it doesn’t do away with what she would really like to have. Please remember God is first, family second and the church is somewhere below these two.
If you can own a home and Pastor a church, stay there. My prayers go up for missionary wives, who many times are under appreciated for what they do and have no home they can call their own. Pastor’s wives are in the same boat.
I would recommend being a Bi-Vocational Pastor, it’s a hard life but worth it in the long run. You will have a stable family enviroment while working for the Lord. If one church don’t work out, there is always another one down the road.
Many Pastors would leave their church if they had another one to go to.
A unhappy pastor cannot help anyone, neither can a unhappy wife.
Problems can and do exist because of this very thing.
I take a different aproach to this situation. I am a new pastor in a small town with a small church. I live in a parsonage right behind the church. I am thankful I do not have a payment, taxes, or maintenance on my home to pay for. It frees me to invest more money into retirement and into a savings account for a rainy day fund.
The only drawback we have found is that the home is a little small but we make do with what the Lord provides. I understand their are overbearing churches but our congregation gives us our privacy and allows us to remodel and makes changes to the house as we see fit.
Living in this home also has helped us make friends with some of the neighbors of the church. One family has started to attend church again because we befriended them. Also, we have had the ability to minister to some of the local teenagers in the community because of our location. The people get to see us live out our lives and be apart of their community.
Personally, I plan to never leave this community but I always want to live in a parsonage if their is one available.
Bless his heart. You’ll learn sweet Andrew, you’ll learn.
Frankly, I hope Andrew perseveres in the course he has set.
Rick, good article. Parsonages are helpful. We live in one right now.
I think several things are at work here.
1) When the housing market was booming, pastors wanted to get into it.
2) When the housing market went bust, a lot of us got caught in it as well. In a down market like this, the parsonage makes a lot more sense – and it safer.
3) A lot of us ignored the wisdom of the sages – that buying a house is not a good idea unless you are going to stay for a number of years (I’ve heard some say 5, others have said 10). Because of costs of buying and selling, I would say that 5 years is a minimum.
4) One of the problems was the parsonage on the grounds – referenced above. You never felt like you were living in your own home. I’ve heard of churches where members acted as if you were living in their home and they felt free to walk in uninvited. If there is a parsonage, care needs to be taken to make it a home, to grant privacy, to keep it functional, things like that.
5) As was also mentioned above, if you are going to live in a parsonage, you need to be even more careful about saving for retirement.
That retirement one is tough. My situation is one where the parsonage subs for paying enough to pay rent/house payment, so there is no extra money to save extra for retirement.
One more thing – we’ve been through some deep waters here financially in recent years. Some of it was my own thickheaded folly, but some of it was a new well, a new septic system and some other large ticket issues that faced us. Home ownership can be as much of a financial drag as it is a blessing.
We’re about 4 blocks from the church in the parsonage–if we were a mile away, we’d be out of town.
It’s a huge blessing, especially because it allows a church in a small community with very few job options for a bi-vo pastor to instead have one that is effectively full-time. They do not have the finances to pay a truly full-time salary, and if I was bi-vo, I would have to live elsewhere to find a job.
And I did that my first 3 years in the pastorate. Not exactly a recommended action from my perspective.
A few of the deacons and I are talking about long-term and looking at how we will handle the financial change that will track our demographic shift: older, retiring congregation in older, dying farm village. Which means bi-vo is the future of ministry here, probably in the next 3-5 years. So, how will we do that? That’s our discussion right now.
Our community is in exactly the same situation. We sold the parsonage, which was unlivable to begin with, and I own my own home. Should I leave, the church will have to make some kind of change in how they do the pastor’s home. One of the drawbacks will be trying to find and purchase a home in this community that would be worth the investment.
I bought my home dirt cheap and have done some remodeling to it. I stand to make a substantial profit on the house. But not every situation will be like that.
Rick,
Thanks for your article and the pros and cons.
I would give one piece of advice to those living in a parsonage. If you can afford it and for investment purposes — invest in a starter home and a couple of acres to be used in case of emergency and possible rental until you need it (or if you need it).
As a former DOM, I have seen pastors forced to resign and no where to go and no where to call home. It is a scary situation for them.
The starter home and property can be sold at retirement and used toward your golden years and/or retirement home.
Blessings!
Dysfunctional churches (with which I have some experience) use the parsonage as a tool–perhaps even “weapon” would not be too strong a word–to keep the pastor under their control. And that “control” rarely is over theological issues, but is one-upmanship and their own sense of power.
John
John, that is true even when it is unintentional.
The parsonage is the “worst” idea a church could come up with and I’ve lived in two that were actually on church property.
You are not a homeowner, and you are not a renter. When the budget gets tight, the parsonage repairs are far down on the “to do” list. You have tenant rights, but you have to exercise them against your employer.
Good luck with that.
Every parsonage I’ve lived in has been in need of serious repair. One parsonage did not have heat in the master bedroom. The powers to be said, “Yea, that’s what the last pastor said.” I talked with the former pastor–two of them in fact.
Same problem, same answer, same power-broker.
PARSONAGE IS A BAD IDEA!
See, I once told you we had more in common than you thought. But even I did not expect it to be in the parsonage issue! My first had two contractors who were members, and the parsonage roof leaked like a sieve, and for years, they would not address it. Finally, when they did, they brought in a cheap bidder, and it leaked almost as bad after as before. I opened the closet in the “study” once, and noticed that I could see the back yard from inside it–no wonder the place was cold as a tomb. Many church members thought that since they owned it, they should have access to it any time they wanted; more than once, we finished supper and went into the living room, to find that a member or two had invited themselves in and made themselves comfortable. And frankly, the state of that parsonage and the church contributed significantly to the nervous breakdown my wife had.
John
Ah, an unending stream of pastorium horror stories. I do not deny they exist.
I have lived in three pastoriums.
The first was separated from the church building by about 200 yards and it was not obvious to a casual passer-by that it was the house where the preacher lived; hence, very few casual visitors looking for handouts. The house was older but well-maintained. The church members were considerate and we had no problem with boundaries. We enjoyed living there.
The second was a very nice, newer house adjacent to the church. It was well-maintained and church members were considerate of our privacy. We never had any difficulty with boundaries. I did have a few interesting strangers knock on my door, though. We enjoyed living there.
The third was about a mile from the church, so no casual visitors looking for a handout. It was a deteriorating house because the church knew that eventually they would get rid of it but just couldn’t quite get that together. A few people in the church worked with me and we eventually arranged for the church to rent it, then later sell it, and I was paid an additional allowance when we moved out. We built a house and when I semi-retired eight years later, we did not have to make any move.
One of the reasons most pastorium tales are horror stories is that telling a positive story is not newsworthy or interesting. My guess is that most ministers have good experiences living in pastoriums, even with a couple of inherent sources of difficulty always present.
The bottom line is that many if not most SBC churches , rural and small, have little choice but to keep their pastorium and the pastor must live in it. Where there is a choice many have gotten rid of it.
If I had any positive stories about a parsonage, I would gladly share it. Other than that it kept a (leaky) roof over our heads though–I have none. Economics notwithstanding–which puts us in the same boat as most of the folks we serve–the parsonage is generally as much of a dinosaur as VBS, maybe moreso. I will grant there are exceptions in some localities, but nothing more.
John
“”One of the reasons most pastorium tales are horror stories is that telling a positive story is not newsworthy or interesting.””
I take exception with your categorization of those who would point out that living in a parsonage is not without many significant drawbacks — including financial hardship.
Perhaps you think it is just hype to talk about living in a house with no heat and temperatures dipping into the 40’s. Maybe that’s just “quaint” for some, unless you have a little child that is sick. Then, it’s not so “positive.”
I’ve had many “positive” experiences living in parsonages over the years, but it was because of the family I was living with not the house I was living in.
I’m glad the “houses” you lived in contributed so much to your “positive” experiences in life. In my experience, the church owned house was not a significant factor in my wonderful experiences as a pastor.
Frank, the original point here was that the financial harm of renting, or the rent-free pastorium, is not what it was pre-housing crisis. While I regret that you and John had bad experiences, my experience (and most of what I have observed from colleagues around me) is mostly positive or neutral.
Still, in today’s real estate market, it is a good time to buy (but not a good time for churches to unload their pastorium).
William,
I concede your point that having a parsonage is a financial asset for the church in many cases. I also concede Dave’s point that some are forced out of their home do to a ministry move and cannot sell their home.
However, tying one’s living arrangement to one’s employment has disastrous potential in many ways. Their is always the option of a church providing a rental allowance. That way when the church (150 plus per month) force the pastor out of a job it does not necessarily force the children out of their home or school.
Not all my parsonage experiences were negative: 1 out of the four was a good arrangement in most ways and more positive than negative.
I currently live in a parsonage. It is almost a guarantee that when I retire I will have to move from the area. I will not be able to afford the cost of a home in this area in 15 years.
I’m not saying all experiences are like mine and John’s. I’d guess many are like our experience, many are neutral in regard to the experience and some are overwhelmingly positive.
My folks lived in a beautiful parsonage in Florida for 12 years (while I grew up) and I lived in one for 4 years in my first pastorate.
Both were nice houses with lots of nice points. The church did not invade our privacy and did excellent maintenance.
Not all parsonage stories are horror stories.
And, for every parsonage horror story there is a pastor/homeowner story about how someone changes ministries and can’t sell his house or loses a mint in the process.
My kids would say that most of their childhood memories came in the pastorium we occupied for 11 years and that they were good memories of wonderful, doting neighbors, exciting backyard stuff (like old dad killing and skinning a copperhead), and stuff like that.
I am grateful to God for it.
Having said that, homeownership has been a boon to me. When I lived in CR, a man my dad led to Christ offered to build me a home at his cost. We then sold that home when Cedar Rapids was at the highest point of real estate values and moved to Sioux City where the market had been depressed when Gateway Computers moved to California.
So, we were able to purchase a gorgeous home in Sioux City with a swimming pool (a hole in the ground into which you pour money) – way beyond what we could have afforded in Cedar Rapids. We’ve made out great with homes, but I know of others (Jared shared his struggle) who have taken severe losses because of home purchases.
The return of the parsonage. Who knew this was coming? My experience almostly exactly parallels Dave’s.
1. Not all banks or mortgage holders will issue a 1099 on a short sale and debt cancellation on a principal residence was part of the 2007 mortgage debt relief act. Better check first.
2. Some churches are in an area where there is no housing market; hence, the pastorium is essentially the only alternative.
3. Sometimes the pastor has to exercise a bit of firm resolve and leadership if the church does not recognize proper boundaries for their pastorium, pastor and family. We all have our stories.
4. Not being able to build equity was always a good selling point in talking to church leadership about contributions to my retirement account. They could understand that.
5. Defaulting on a mortgate is sometimes the best alternative, although one has to get used to the idea of doing something that has always been considered shameful.
6. I handle some rental property, something I did years ago but most ministers I know do not have the temperament, skills, or mindset to be a landlord. A rental agent is costly, ten percent of gross rents in my area, as is paying a third party for all repairs and dealing with deadbeat tenants.
7. Renting is a good alternative these days.
My IRS issue is that the IRS is claiming that, despite the 2007 relief, the cancellation counts as income for myself and for my wife: they are assessing the cancellation amount as my income and her income. Not jointly. Same amount for both of us.
Which is completely illogical. The bank canceled one debt, not two. Moreover, based on everything I can find in IRS publications regarding that 2007 law, the 1099-C did not have to be reported and instead form 892, I think it was, had to be. Which it was.
They still think I underreported my income by twice the amount of debt forgiven, which results in a tax bill equal to two month’s salary for me.
So if I never have a mortgage again and live in a van by the river in my aging years, I’m going to be okay with that.
And defaulting on a mortgage is something to consider, unless doing so allows the bank to seize your checking account, which mine would have done. And would have resulted in being expelled from seminary, which I was told would happen (by the seminary) if my credit report showed I had failed to keep my obligations. So it wasn’t an option.
The issue that makes parsonages extremely unattractive to me is the fact that any issues with the home have to go through a building committee. Most building committees have limits as to how much they can spend without congregational approval. There are few things more dehumanizing for a pastor than having to sit through a meeting where they discuss whether or not to fix an issue in the home that you have to live in. If you own it, you do have to pay for it, but at least there is not a business meeting involved.
There is truth in that, of course. Depends on the church. But the point I draw from this is that 10 years ago we assumed that parsonages were a bad financial move. In this world, that has changed somewhat.
If pastors and churches had longer relationships, parsonages would be a bad idea. However, with an average stay of 3 years, sinking roots is not an option.
One thing new pastors need to keep in mind if they are living in a parsonage is that you have to pay taxes on the fair rental value of the house. It is considered part of your income.
If you own a home, even though you have to pay property taxes on it, I believe you can deduct you mortgage payments. I live in a parsonage that is literally 15 to 20 feet away from the church, and I definitely agree that it would be better if the parsonage was at least not on the same lot.
Jon, I’m not a lawyer or a tax accountant, but according to my understanding, what you said above is not completely true.
Ministers have dual standing in tax matters. We are employees for income tax purposes and we are self-employed for Social Security (SECA) purposes.
As ministers get a housing allowance that is non-taxable income, the “fair rental value” of the parsonage would not be taxable in terms of income tax.
The FRV of the parsonage does need to be considered in calculating your Social Security income and your SECA payment.
Maybe someone else knows. But I think you are incorrect to say that the FRV of the parsonage is included in calculating your federal income tax.
Why would we get housing allowances that are tax free, but have to include the cost of a parsonage? That would be a huge disincentive to live in parsonage.
Dave,
We do get to have a tax free “Housing Allowance,” but we do have to pay social security and tax on the fair rental value of a parsonage. It’s been this way for years. So, a parsonage is not completely “free,” as some would think.
Under Housing Allowance, we dont have to pay taxes on utilities, furniture bought for use in parsonage, cleaning supplies to clean parsonage, etc.
But, we do have to pay taxes and social security on FRV of the home, because it’s considered income.
Bummer.
I would say that there are pros and cons about owning our own home, and having a parsonage. But, in a rural area, where not many people are moving into the area, a parsonage is better…..
David
David, I do not think that is completely accurate. You only have to pay SECA on the FRV, not income taxes.
Dave,
What I wrote wasn’t clear so I appreciate you putting the right information out there. It isn’t part of our income taxes but part of Social Security. I wasn’t aware that it would be taxed at all before becoming a pastor and wanted to make sure other new pastors would know this.
Yep, that is correct.
And, as a pastor, that payment is a real blow, isn’t it?
It is part of your real income. It is just excluded from taxes because of our wonderful Sacred Clergy Housing Allowance tax break.
SECA taxes have been the killer for most of us but we cannot claim that it is not fair, or that we have been singled out for this.
Render to Caesar. Hold your nose if you wish.
Dave, you’re right except for retired pastors. Retired pastors don’t have to include the FRV of the parsonage in calculating their SS Income. I hate the tax code. It’s ridiculously complex.
Yep. Again, it’s all in the Guidestone booklet – the best concise guide I’ve found, and I have devoted a lot of time to this.
Here’s the link to the free guide online.
The information I referenced is on pages 17 and 18
Guidestone has its ups and downs, but in terms of tax advice, it is unparalleled in excellence (in my humble but correct opinion). I checked the recent Guidestone Ministers’ Tax Guide and it corroborated what I said above.
“The rental value of a parsonage, and a housing allowance,
are exclusions only for federal income tax reporting purposes.
Ministers cannot exclude a housing allowance or the fair rental
value of a parsonage when computing self-employment taxes
(SECA) unless they are retired. The tax code specifies that the
self-employment tax (SECA) does not apply to ‘the rental value
of any parsonage or any parsonage allowance provided after
the [minister] retires.’”
The housing allowance or the parsonage’s FRV are EXCLUDED from consideration as per taxes but must be included in calculations for SECA (social security).
I’m not an accountant, but have had my taxes done by top-notch CPA firms since about 1992. And all of them agrees that the fair rental value of a parsonage had to be reported as income.
John
As part of your Social Security. But why would they give you a housing allowance to own a home, but charge you for fair rental value of the parsonage.
I’d call Guidestone. I’m pretty sure on this one.
John Fariss,
I think you need to heed Dave Miller’s advice on this one.
I asked the tax lady and former HR person for two seminaries,a large Christian school and numerous businesses and friend to many Guidestone old timers that I am living with and who has taken all of my money away from me for near four decades because she thinks she a better financial manager than I about your comment. She gave Dave Miller two thumbs up on this one.
It seems that many CPAs, although generally very competent, do not completely understand the tax codes as they apply to the clergy. We are a strange lot as we relate to Uncle Sam and our money that becomes his money.
John, if you’ve paid income taxes on your housing allowance, you need to get a new “top notch” CPA firm to do your taxes. These other ones are wrong.
Dave is right, you pay Social Security on the FRV of the parsonage but not income tax. I have an extremely competent tax preparer who also happens to be my church treasurer. She attends the Guidestone seminar regularly to stay informed on preacher taxes. She is the most squared away treasurer I’ve ever had the priviledge to serve with.
Excuse me: I said “tax” in the generic sense of government taking money from me without any material return, not the tax-code legal sense of income tax. I was “taxed” for the Fair Rental Value for Social Security purposes. It is moot now anyway (for me) as we have lived in our own home for 9 years.
But CB is right: we clergy are a strange lot in terms of the tax consequences of our calling, and if you ask most any two CPA’s or tax professionals about details of how to calculate our taxes, you will get at least three opinions.
John
A church in Houston allowed the pastor to choose the house he wanted in the neighborhood he wanted. There was a price limit. The church paid for it and gave him 5% of the house each year he was pastor of the church. The pastor is Ed Young.
2nd Baptist has rich people in it, however, churches need to save money like God expects us to save money. I recommend that each pastor who is on this blog to prepare their congregation for their next pastor. Even if the church buys the parsonage and sells it to the pastor, they should not charge him interest.
Thanks for the exchange, everyone. I’ve been occupied all day and unable to interact, but reading your responses tonight I have learned a lot from your individual perspectives and situations. God bless.
Blog about pastors and their money…..
My favorite state convention staffer is the guy who interprets the tax, insurance, and retirement stuff for ministers. I guess I went to half a dozen pre-retirement conferences (they offer one each year) to get up to speed.
I trust that my colleagues have all the paperwork in place.
The SBC provides some of the best, most reliable information on stuff like that.
Like an idiot, I ignored most of it when I was a young whippersnapper.
The church I grew up in had an interesting solution to the particular problem you bring up, Rick. The church put a small mobile home on the property that originally served for cheap overnight security from a policeman that stayed there during construction of the church (the church moved from a small location to a bigger plot with room to grow). Ever since, the mobile home has stayed and periodically been refurnished, and when new staff members are hired from out of town they have a place to stay for a few months and get their ministry started while they wait for housing to get taken care of.
I could be wrong, but it seems that there has been a shift in the cultural sensibilities in personal ownership in general and I can’t quite put my finger on it. My church has recently helped two families offload most of their belongings, including their homes, so they could go to the mission field. They are both leaving in the next couple of weeks for training for their final destinations – one to London and the other to Kenya. The thing both families have professed is how great it was to be free of so many possessions so they could do their ministry. We just sent another couple back to their home in another country, where they can’t claim personal ownership of their dwelling. They typically stay in the old parsonage of a sister church when they are in town.
While I don’t expect a pastor and his family to bear quite the same burden, how many of you who are pastors would be able for your family to make the same personal sacrifice as our missionaries? I’m not asking rhetorically as a condemnation or rebuke in any way, so I pray you don’t take it as such, but I’m curious as to the difference of calling with regard to the sensibilities we have about personal ownership in today’s world.
Jim,
I’m with you there in principle, but the problem is the principal, as in payoff balance. Ministry families who are free to answer that call must not be tied down to a real estate mortgage that is upside down and thus constraining. All things considered, and this is heavily influenced by the crash of 2008, but I am beginning to view the parsonage idea quite favorably, for all the reasons you mentioned.
FBC Farmersville has offered once or twice to give us a housing allowance and move us out of the parsonage into a house of our choosing. I’ve declined both times. Why? Because I’m also, essentially, the CFO of this church, and the financial situation for the church is a no-brainer:
1. The fair rental value of the parsonage in Farmersville (it’s not that large) is probably more than $10,000 per year (I’m being quite conservative). If I were to try to rent this house or one like it in Farmersville, I’d definitely wind up paying that much or more.
2. I’ve now served here for almost 14 years. That’s $140,000 (at the very least) worth of salary value that FBC Farmersville has provided to the pastor over the course of my tenure here.
3. I doubt very much that actual cash expenditures on the parsonage have been any more than $15,000 for the entire 14-year period.
And so, for the church, the net financial benefit of having a parsonage rather than a pastor’s housing allowance has been at least $125,000 over the past 14 years. That’s not counting the value of the asset and any possible appreciation it has experienced over the course of 40 years or so since it was built.
The last time the deacons brought it up, I simply said this: “Thank you for wanting to take care of me and my family. Let’s just do this: If I make it here 25 years, why don’t you just give us the parsonage?” They liked the idea and agreed verbally. I don’t know whether they’ll actually do it at 25 years or not, and I don’t really care. But I feel good knowing that I’ve led the church to make a financial decision that, in our situation, is clearly the best stewardship of the church’s resources.
Readers of SBC Voices,
Please allow me to interpret Bart Barber’s comment.
“FBC Farmersville has offered once or twice to give us a housing allowance and move us out of the parsonage into a house of our choosing.”
Interpretation:
1). The first time was six months after he moved in and planted daisies in old commodes and bathtubs he had found at a yard sale.
2). The second times was when he decided to subsidize his income by raising chickens and hogs in the garage.
“I’ve declined both times. Why?”
Interpretation: He declined because he knew that if they ever get him out of the house, he will never get back in.
“Because I’m also, essentially, the CFO of this church, and the financial situation for the church is a no-brainer.”
Interpretation: They will never get their money out of the house if they sale it. The cost of repairs to the yard and garage and replacing the wood floors he used to start fires in the fireplace would be more than the house could bring in today’s housing market.
There is a final reason the members of FBC Farmersville have offered to give Bart Barber a large housing allowance to move out of the parsonage.
The second Christmas season Bart served at FBC Farmersville, he invited Tim Rogers to park his RV in the driveway of the parsonage and spend the Christmas Holiday with him and his family.
I will not go into all of the details. However that Christmas event in Farmersville, TX was the inspiration for the Chevy Chase & Randy Quaid movie:
National Lampoon’s Christmas Vacation.
C.B.,
I love it–I LOVE IT.
John
So did Chevy Chase and Randy Quaid. They made millions off the royalties from that movie. And just think, they owe it all to Bart Barber and Tim Rogers. 🙂
CB,
🙂 I’m glad you’re around to tell us the truth.
David
I do my best, Vol.
C.B.,
I’m driving right over there to set you straight!
…right after I lower the engine back into my car with the block & tackle hanging from the tree in my front yard.
Don’t let Tim Rogers use the torque wrench on the valve covers. You will never make it from Farmersville, TX to Mount Vernon, GA if you do. . . because I sure would like to visit with you guys.
I want to talk to you about going into business with me and Vol. We think we can cash in right now by starting a ministry based business finding non-SEC FOOTBALL players real girlfriends to sit in the stands and cheer for them when they lose National Championships to SEC NATIONS.
I think we will make millions. What do you think?
might work….lol.
cb, are you in Mt. Vernon? That’s my home stomping grounds (Alamo).
David Tuten,
As of September 23, 2012, I became a resident of Montgomery County, GA, having become part of the administration and faculty of Brewton-Parker College.
However, I still do and always will bleed CRIMSON and ROLL with the TIDE just as I have always done when living in other places on this planet.
Yet, with this move, I still get to lay my head at night on a pillar in an SEC NATION. That makes for a far better sleep at night than when living in other places such as North Carolina and Pennsylvania. 😉
Hope it is going well. Last I heard the old B-P was struggling a bit.
If CB does good enough in his present job, he may get a promotion to one in Big 10 country.
David Tuten,
That is true. For that reason, the trustees recruited a new administration.
By God’s good grace, our desire as a new administration is to see BPC become a Christ-centered educational institution to equip young Christians to live according to a biblical worldview, take up the cross, die to themselves, and follow Jesus wherever He might lead as men and women, husbands and wives, fathers and mothers and to fulfill the Great Commission in the market place and as part of the Church through local churches until the return of our Lord.
Pray for us as we seek to fulfill our mission as God desires.
Congratulations, CB. I occasionally pass through and would love to drink tea or coffee with you.
Funny you should write that, William.
You are on a list of guys I have of whom I want to take to lunch in the future. If you get over this way before, I get there, give me a call. Lunch is on me.
If you make it to 25 years and they give you the house, do you then owe income taxes on the gift given? With the direction taxes are going you’d better start saving now…..
I’d consult a local finance lawyer for the gift of real estate to someone who already has possession of it. There may be another way where the law wasn’t designed to cover certain special circumstances. This is what legal loopholes are supposed to be for (rather than what people abuse them for). Lawyers live in the grey areas.
Dale,
I’ve thought about the tax situation if that ever were to happen. I’ve decided not to spend the money on hiring professionals to make preparation for the taxes at this point because…
1. Who knows whether the Lord will leave me here another 11 years?
2. Who knows whether the church will actually do this at 25 years?
3. Who knows what will be the shape of tax law after a decade has passed?
“Who knows?”–That, of course, is an appropriate question. I know that home prices will change, the market will be different, and there is no way to really prepare for an unknown. Maybe at that point it would be more beneficial to purchase the home from the church instead of receiving a gift?
I once purchased a parsonage from a church I served. It was a good situation for all those concerned. The church needed the money and I wanted the house. When we sold it later the economy was in the midst of a huge housing boom in that area. The profit off of that house was very helpful at that time. I’d put a lot into the house on my own, since the church couldn’t afford upkeep when they owned it. Made my time and money back and then some.
I’d think there would be some definite tax issues on a gift of that size, though.
By the way, it’s kind of funny to me now how urban Farmersville, Richardson, Garland, Mesquite, and Carrollton are. I grew up in Mesquite in the 60’s and 70’s and that whole area seemed SO far apart and removed from Dallas. Now it’s just one big urban blob.
We haven’t quite been taken in by the blob yet: You still have to cross rural space to get to Farmersville from any direction that you might be coming…but that rural space is shrinking!
I’m neither a tax attorney nor the son of a tax attorney, but a farm friend taught me this one:
Parents wanted to pass the farm on to their children, but the value exceeded the “gift threshold.” Just giving their life’s work over to their family would have required selling a third of it to pay the taxes.
So, the parents sold the land to the children, and the children signed on to make annual payments for an appropriate number of years. Amortized out and everything—
Payment amount? Just below the “gift tax” threshold. Each year, the parents “gifted” the waiver of that annual payment. So, each year everyone reported (as required) the gift situation. When it was all said and done, the owner-financed transfer went down without exchange of cash and without parents having to pay taxes to give their children the family farm.
Not sure if it’s applicable to your situation. And given that my family’s land holdings in Georgia are approximately 8 ft square and 6 ft deep, I’m not expecting to need the idea, but I thought I’d share it.
I appreciate the serious comments I’ve read on here from pastors. It confirms what I’ve always known: pastoring a church is not just another job. I have a handful of scattered observations that occur to me as I consider the wisdom of parsonages.
It seemed that Jesus in his rabbinical ministry, and Paul in his church-planting ministry, both engaged in a variety of living situations. No one situation is offered in scripture as the way it should be.
With regard to the abuses of living arrangements that many churches foist on their pastors, it is clear that the ideal is rarely achieved.
A few pastors pastor the churches they were raised in. Most pastors come from other cities entirely. I’ve always wondered why more churches don’t raise up members to be their pastor. I know there’s some wisdom regarding a retired pastor staying on as a member in the church he doesn’t pastor anymore and a general sense of awkwardness in holding a pastor accountable who is “one of you”. But most new church plants in third-world countries that I know of raise up local pastors from within, contrary to the method of the churches the missionaries who planted them come from (which I find a bit odd).
My own church has three pastors who have been hired from outside and three who have been hired from within. Multiple pastors (in different roles) is another issue. We don’t have six parsonages. They all just get a housing allowance. But the idea of some pastors who come from elsewhere versus pastors who serve their home church raises a different consideration.
If a member of a congregation acquires the necessary skills and/or education for being a pastor and the church calls them to be the/a pastor there, then what good does it do to have them move from the house they already have? A parsonage begs the question that the pastor will always be hired from elsewhere.
But not all pastors from elsewhere need a parsonage provided. I would equate such pastors as missionary pastors. That is to say that some home church elsewhere has voted them to receive seminary training without the intent of using their training there. So that church must consider that the pastor will be a missionary to some other church if they are ordained as such.
What this church typically doesn’t do is provide for the sending. That’s a difference between a missionary and a pastor who goes. The receiving church is expected to pick up the tab for calling a pastor from another city to move there. Most missionaries call the place they serve from “home” although most of them don’t own the house outright. If the house is bought, it belongs to the sending organization.
But the missionary has a place to go back to. This is not necessarily a home, but a mission organization. For a pastor who is called, the sending church relinquishes the pastor to his own recognizance and any calling church serves as both sender and receiver. If the relationship with the pastor goes sour, there is no fallback for the pastor. (This situation only happens in congregational denominations like ours. A hierarchical denomination serves as the sender for its pastors.)
Now, I’m not drawing any conclusions from this one way or the other, but it seems unwise for a pastor who has reservations about his relationship with the congregation he serves to accept a parsonage arrangement with them, which he would have to do up front – and how is that going to happen? It would be good if there were a way to find out if a church had a reputation for being a pastor-abuser, but I don’t know how that would happen without either asking others for gossip about the church or setting a bad tone by asking the deacons/elders how the past five pastors came to leave the church.
It all just seems like so much unnecessary trouble when your housing decisions are so intricately tied to your occupation.
So, I’m in talks with what will be my first church and they have a parsonage. I currently own a home and live approximately 15 miles from the church. I am completely ignorant of these matters so I apologize if this is a very obvious question. But..would it make any kind of sense to sell my home, bank the proceeds, and live in the parsonage? I ask really about the financial details of this negotiation. I still have to figure out if I really want to live next door to the church (and the highway).
Cindy,
By owning your home, your Housing Allowance will exempt housing costs from taxable income, while still allowing you to deduct mortgage interest that was never counted as income in the first place. Some refer to this as a double deduction or the best tax break in America. It sounds too good to be true, but if we can keep William Thornton from spoiling it all, it is one beautiful aspect of ministry. You may be better off where you are. Try to attend a Ministers Tax Conference or read the guide below:
http://www.guidestone.org/ministrytools/~/media/GuideStone%20Corporate/Ministry%20Tools/MinTaxGuide/2011/2112_MinistersTaxGuide.ashx
Rick, I appreciate very much your non-judgmental response. I shall check out the guide that you referred to. I also didn’t know there was such an animal as a Minister’ Tax Conference. I’ll do some looking around about that as well. Seems as though it would be most helpful.
Rick,
Thanks Rick. I somehow missed this deduction in the few years I actually lived in my own house.
Ignorance is not bliss — it is expensive.
I hope you folks understand why I deleted comments. Let me make it clear.
1) Like Calvinism, discussions of complementarianism/egalitarianism and the role of women in ministry have a tendency to spiral out of control.
2) I am united with those of you who raised the issue that the Bible restricts the pastoral role to men. But the post is not about the role of women in ministry, but about housing allowance/parsonage/tax-related issues.
3) I cannot see how a discussion of the role of women in ministry will add to the topic of Rick’s post.
So, for those reasons, I’d rather not open that can of worms. Most of us here would see scripture as not permitting women to serve in pastoral roles. But tax law and real estate practices make no such distinction.
So, it seems best to me that we would stop our trek down that garden path.
Dave,
No problems here. I understand, and had said all I intended to say.
Although…I was semi-elated to find some common ground with the esteemed Mr. Worley…
“Although…I was semi-elated to find some common ground with the esteemed Mr. Worley…”
I had the same thought. 🙂
I am always glad when great minds think alike! 🙂
David
A triumvirate of agreement. The SBC is saved and our names shall be revered for generations…
This can’t be good…..
I really want to make a comment here, but sense that anything I would say would not serve the greater interests of the kingdom!
Jealousy is not a fruit of the Spirit…
To Rick et al:
There is now a proposal, not just a hostile lawsuit, to eliminate the clergy housing allowance.
Details on my blog, perhaps tomorrow.
Sorry to spoil everyone’s weekend, especially Rick’s because I know how s-e-n-s-i-t-i-v-e he is about this.
William,
I’m no expert on this topic so I’m just thinking out loud. You seem delighted that this is taking place, I suspect because you feel it corrects some “moral imbalance.”
You decry a “double deduction,” but what about the “double-tax?” Do you know of any other vocation that is taxed as both an employee AND as self-employed? I don’t.
Personally, I don’t think this will balance the slate in regard to a horrible preference ministers receive. What it is likely to do is lower the wall protecting the church from state intrusion, not build it higher.
I understand somewhat the arguments you posit, but I’m not so sure that Rick is the “s-e-n-s-i-t-i-v-e one” in this issue.
Perhaps you have made the argument before and I missed it, but exactly how is this a “good and equitable” thing?
Frank, one of the problems with a discussion forum like this one is that some exchanges between people presume some background. Rick has poked at me, in his good humor way, about my writing on the HA and he gave a little jab above. My response is lighthearted.
On the HA itself, I have written a good bit about it on my blog which you can read by looking at the labels. I will give a brief summary here.
The HA is our sacred clergy tax break, an income exclusion that probably benefits those of us who use it to the tune of a couple of thousand annually in tax savings. I have no moral or constitutional objection to it. In fact, I rather like it.
What I object to, and what I think may ultimately harm us all, is the fact that in the tax code there is no cap on it. A minister living in a multi-million dollar mansion can exclude hundreds of thousands in income, potentially millions since there is no maximum, from income tax. Before the IRS put a stop to it we had ministers claiming the HA not just on primary residences but also on luxury vacation homes. We would benefit by having a cap, IMO, in the court of legislative and public opinion.
And I do not ‘decry’ the double deduction but I do freely admit that it is a special favor given to us in the tax laws, one that is helpful to the most of us who are average income clergy. In my opinion it would be unfair to target ministers on this unless there is some comprehensive tax reform that simplifies and eliminates the gazillions of special provisions that benefit one group or another.
I am told that there is nothing in the legislative history of the HA that explains the income exclusion on the basis that ministers pay SECA taxes. We are self employed because the government did not wish to place the reporting and deduction responsibility on all the churches. IOW, we do not receive the HA to offset the SECA taxes.
Let’s be candid here – we get a tax break. I like it just like the real estate industry likes the fact that mortgage interest is a deduction or like the hospitality industry likes the fact that meals and entertainment can be deducted.
There is a lawsuit challenging the constitutionality of the HA but it faces a long uphill struggle. I doubt it will be successful.
William,
You are correct that blogs often do not tell the whole story behind an exchange, so I appreciate your gracious answer.
I get where you are coming from and it seems to make sense. The key as you point out is not to target one group–especially a religious group–without equal and fair reform across the board. I could live with that.
I just wanted to point out that we are not just a special group when it comes to deductions, but one when it comes to taxation. As I said, no other group has our dual standing in the tax code.
Thanks again for your answer to help set me straight.