The church wants to sell its Pastor their Parsonage for $1.00. Can this be done and are there tax liabilities for the Pastor?

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The church wants to sell its Pastor their Parsonage for $1.00. Can this be done and are there tax liabilities for the Pastor?

Asked on June 20, 2009 under Real Estate Law, Pennsylvania

Answers:

B. B., Member, New Jersey Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

I'm sure it can be done. What the consequences would be depends, possibly, on a number of other things, and the differences in law from one state to another might matter.  For reliable advice, based on all of the facts of the situation, you'd need to see a lawyer in your area.  One place to find an attorney is our website: http://attorneypages.com

The federal income tax consequences I'm going to leave to a CPA;  I can't say it's impossible for the IRS to decide that at least some part of the value of the house is income and taxable to the Pastor.  He would also have to start paying property taxes to the local government, because as a private residence it would no longer be exempt from that.


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