Parsonage question

You might want to ask your new pastor what he wants. If he wants to live in a parsonage, then keep it. If he would rather buy his own house, then sell it (to him???) and offer a housing allowance.

 

Seems steward ship would call for the church to do some figures to see what pencils out best. If the parsonage is paid for keeping it would be better, if a fairly new mortgage then ???

The church will loose the equity building if they are giving the allowance.

Many pastors have had good "luck" in selling their homes when they move on, but many have found themselves with a real millstone around their necks when wanting to move on but not being able to sell.

The current housing market would be a good time for a pastor to buy and a poor time to sell to the church if it were in our area but some areas that might not matter.

Me thinks the prayer thing might be your best option at the moment :thumbs:

We know of one church that kept their parsonage for missionaries that visited or were in the area for awhile. At times they rented it out for added finances, but that could get sticky with some renters these days.

 

IMO, there's not one good answer.

In one of my former churches: very economically depressed area; it's very difficult to sell a home. A parsonage made sense there...not to mention: the church was smaller, and this allowed them to adequately compensate the ministers.

In my current situation: this area is doing well, even in the housing slump. Thus, it's much easier to move property. Here, I'd much rather own my own home.

One other thing: If I want to hang a picture here, I'm doing it in my house, not someone else's. As an associate pastor, I lived in an older church-owned house at my former church. While I was there, the church built a new parsonage for the pastor. I'm so glad I didn't live there...having the old ladies watching over my shoulder to "make sure I didn't mess up the new house" would have driven me insane. If a church chooses to own a parsonage, a conscious effort should be made to allow the pastor and his family "ownership" of the home, within reason.

 

Sell!

Trotter, if I had to give "across-the-board" advice, I would say sell the parsonage. Here is why:

1) Most pastors' wives prefer to have a place they can call their own!

2) Churches usually justify low compensation by saying, "We furnish him a house!"

3) Basically, pastors wind up funding the equity the churches builds up in the parsonage by settling for a lower compensation. The equity does not benefit him in the least, but he has paid the cost of it!

4) Having a house of his own can often cause a pastor to think twice before his knee-jerk reaction to the slightest trouble in the church is to pack up and leave.

Here's a thought....suppose the church sells the parsonage and calls a new pastor who has always lived in a parsonage. Most likely he has never accumulated money to pay for a down payment on a house. The church could use the money from the sell of the parsonage as an "equity fund." This means that if the new pastor needs help for a down payment on a house, the church could lend him money from the "equity fund" at a fair interest rate. An agreement could be drawn up between the pastor and church that he would make interest payments on an annual basis and pay the principle any way he wishes as long as it is paid in full when and if he sells his house. It could be specified in the agreement that should he resign the church he will have up to 6 months to re-pay the loan, with the church having option of extending that time period.

One more thought...suppose the church refuses to sell the parsonage. In this case, the church should give the pastor an "equity allowance" each month so he can accumulate some money to purchase his own house at some point in time.

 

1) Correct.

2) Unfortunately correct.

3) Exactly.

4) I think this works the opposite direction. Being in a parsonage "traps" you in a place. When a church has a minister in a parsonage, the church owns him. Think about this. The minister's income and residence are completely at the mercy of the church. If the church fires the minister, then he has to move, even if he doesn't have the prospect of another job.

 

As a pastor, I've done both.

What many do not realize is that pastors must pay SE tax on the FRV of the parsonage, since the parsonage is a benefit. So there's no such thing as a free lunch.

Pros:
- the pastor doesn't have to look for a place to live.

Cons:
-The pastor and his family are forced into a house they didn't choose.
- The pastor is in a bind if he feels he must leave or the church must fire him. Suddenly, he and his family are now homeless.
-The church always feels it's their house, and the pastor does too. Had a church member break into the parsonage and go through my things in my home study. When I complained, I was given the "it's our house" line.
- The pastor does not have an opportunity to own a home and build equity. In today's market, that may not be too much of a con
- Given the trend away from churches having them, existing parsonages are older houses that are expensive for the churches and pastors to maintain.
- The house may not be conducive to a spouse's work location if she has one.
- The community knows the parsonage, and they feel it's a public place as well (you get a lot of people thinking it's an extended church office, from beggars, salespeople, etc.)

My advice: if you're going to give the pastor a good housing allowance, sell it. If not, at least give him the parsonage and a housing allowance as well, but not at the expense of other compensation. Also, have CLEAR policies in place about who pays for what in terms of utilities, upkeep, maintenance, etc.

 

I go to post, and no one had replied. I finish my post and several people replied!

As for an equity fund that makes a loan: this may not fly tax-wise. Plus, having the church as a lender is not a good idea and may not even be Biblically justifiable.

I can think of only one church that has ever not regretted renting their parsonage. It's a bad idea. All have eventually either sold the house or used it for office space or other campus needs.

One final consideration. I know many men who lived in parsonages all their life. They approached retirement basically homeless and no money to buy a home if they wanted one. Not good.

The best choice: the church should pay a man a living wage so he should be able to afford a median home for his area.

 

Exactly. The approximately 15% tax is brutal.

You have to pay that on the housing allowance, also, but you can also get a deduction on your mortgage interest, saving you some.

I am definitely in a bind right now. I live in a church-owned house, and even though I feel like I should leave (it was a very bad situation I got into, without my knowledge), I can't get out until I have an offer on another job because I'd be homeless if I left.

 

I'm sorry you're in the bind you're in brother.

The mortgage interest deduction is good, but not enough to compensate the effective tax rate that can be higher than the 15% of SE tax. Too many churches do not give their parsonage-living ministers a housing allowance. That's a shame.

 

Several thoughts from one who lives in a parsonage:

1. The church could not afford a full time pastor without the housing benefit.
2. It saves me money because I pay no property tax on the house (while all my neighbors pay in the neighborhood of 4-8 weeks of my salary just to pay property tax).
3. Fiscal discipline means I save so if I ever need to buy a house, I have money to do it.
4. If you sell the parsonage, you get a one-time influx of cash. You cannot depend on that for operating expenses.
5. A parsonage can be helpful even if the pastor buys his own house for the time when an assistant is brought on or some such. It can also be used for offices, off-site Bible studies, missionaries, etc.

Overall, if you can afford the maintenance and upkeep, keep the house even if the pastor doesn't live in it.

 

I mean that it is preferable to have a housing allowance (no income tax) plus the mortgage interest deduction--the colloquially dubbed "double deduction."

 

As a pastor's wife who has to live in a parsonage, PLEASE give them an option of owning their own home.

 

I agree...

I pastored a church one time that had sold the parsonage, and then wished they hadn't...

I am very thankful for the parsonage we live in.
I wouldn't want to move to a new neighborhood, and have to buy a house, then have the burden of getting rid of it, if God moved me a few yrs after that.

Keep the parsonage.

 

I can't imagine a church that won't let the pastor buy his own house if he desires.

 

I could. They might want the pastor to live next to the church to be more "available."

More realistically, if the offer of the parsonage is there, the salary will likely be lower. If the church cannot afford to pay more, then the parsonage may be a blessing. Otherwise, the argument goes, "Well, pastor, we have this parsonage for you, so we aren't going to give you a housing allowance. If you want to go out and buy a house anyway on your salary, I guess that's ok." Unfortunately, that may be hard to do on 25k a year.

 

25k a year!! That would be great!!!
At least for me.

 

That's why a church in your situation benefits from the parsonage.

I'm not speaking of churches like that. I'm speaking of churches that could afford to pay a housing allowance but don't because the parsonage is cheaper.

 

Exactly. This is what I meant, Pastor Larry.