What expenses qualify for the housing allowance, and what doesn't?
Reviewed by Paul McWilliams, CKA®, financial advisor to pastors, churches, and ministry organizations.
Qualifying expenses are those directly related to providing your home. Commonly accepted examples include:
- Rent, or mortgage payments (both principal and interest)
- Down payment and closing costs on a home purchase
- Real estate (property) taxes and homeowners association dues
- Homeowners or renters insurance
- Utilities: electricity, gas, water, sewer, trash, basic home phone, internet, and cable
- Repairs, structural maintenance, and home improvements (roof, paint, deck, remodels)
- Furniture and appliances (purchase, repair, and replacement), dishes and cookware
- Decorating items: rugs, curtains, pictures, bedding, towels
- Cleaning supplies, light bulbs, and paint
- Yard care: lawnmower, landscaping, snow removal, tree trimming, pest control
What does NOT qualify:
- Groceries and food
- Maid service or servants (though hiring someone for home or yard maintenance can qualify)
- Personal items: toiletries, clothing, paper products like plates and napkins
- Cell phone service
- Personal gifts
One more limit worth knowing: the exclusion applies to your principal residence. Expenses for a second home, vacation home, or investment property do not qualify; the IRS and courts have limited the exclusion to one home. When in doubt, ask whether the expense directly provides or maintains the home you live in.