{"id":126213,"date":"2025-03-11T11:53:28","date_gmt":"2025-03-11T11:53:28","guid":{"rendered":"https:\/\/peraltafinancing.com\/accounting\/figuring-fair-rental-value-for-a-housing-allowance\/"},"modified":"2025-03-11T11:53:28","modified_gmt":"2025-03-11T11:53:28","slug":"figuring-fair-rental-value-for-a-housing-allowance","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=126213","title":{"rendered":"Figuring Fair Rental Value for a Housing Allowance"},"content":{"rendered":"


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\"Fair<\/div>\n

Figuring your fair rental value (FRV) is an essential part of claiming a housing allowance<\/a> as the federal income tax exclusion is limited to the lesser of:<\/p>\n

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  1. The amount actually spent on eligible housing expenses.<\/li>\n
  2. The fair market rental value, including furnishings and appurtenances such as a garage<\/em>, plus furnishings and utilities. <\/li>\n
  3. The amount officially designated in advance as housing allowance. <\/li>\n<\/ol>\n

    Of the 3 above conditions, figuring the FRV of their home is the area that confuses most ministers. <\/p>\n

    Also…ministers that live in a church provide parsonage must know how to determine the FRV of the parsonage, as they are required to add in the FRV of the parsonage when figuring their self-employment tax. <\/p>\n

    So I am excited to be able to share the following article written by Ray Wallace, tax return specialist and founder of Wallace & Holland Company, Inc. <\/p>\n

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    Figuring Fair Rental Value (FRV)
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    It seems we have had a few Pastors this past year who have asked us questions regarding how they would figure out the Fair Rental Value (FRV) plus the Cost of Utilities.\u00a0 <\/p>\n

    \"Figuring<\/div>\n

    The IRS doesn\u2019t go into detail explaining how you should figure this out. However, they have accepted this explanation.\u00a0 <\/p>\n

    The FRV of your home or parsonage, whether it is provided by the church, owned by the Pastor or it is rented by the Pastor, is what the square footage the home or apartment would rent for in the community that you live plus the rental value of all the furnishing within that home or apartment.\u00a0 <\/p>\n

    It is recommended that the Pastor contact a licensed realtor within the community and request a fair rental cost for a similar home or apartment. Then the Pastor should seek out the fair rental value for all the furnishing within the home.\u00a0 <\/p>\n

    A method that has been used in the past is the percentage method. <\/p>\n