Minister Housing Allowance (Section 107)

Definition

A tax exclusion under IRC Section 107 that allows ordained ministers to exclude from gross income the portion of their compensation officially designated as a housing allowance by their church governing body. The exclusion is limited to the lesser of the designated amount, actual housing expenses incurred, or the fair rental value of the home. Proper advance designation and documentation are required, as an improperly designated allowance can be recaptured as taxable income on audit.