Kenneth Copeland's $7 Million Home Is Tax Exempt, Report Finds

The clergy housing allowance provision is legal

It makes no sense to me, but there are a lot of tax things that befuddle me

The concept, as I understand it, is to even the playing field between clergy that live in church owned housing, and those who furnish their own homes. How would you tax the salary value of a Catholic priest living in a monastery? (Or a Baptist living in a parsonage?) If the housing allowance is removed, look for a rush of ministers moving into church owned housing.

These provisions developed over time and fraudsters like Copland are taking advantage of it. Most preachers aren’t so well compensated.

In Canada, we have a housing allowance provision, but it isn’t exactly the same as the USA. There is a formula and a cap (which is a bit beyond me, my tax software figures it out). I think it used to be more open-ended but the government tightened it up no doubt due to some extravagances by some. One difference in Canada is that we don’t get to deduct mortgage interest like Americans do… (to touch another hot button).

However, as Greg notes above, the basic idea of it comes about from the former parsonage concept. Many pastors in the past had housing provided by the church, but built up no assets of their own. A home is one of the biggest assets anyone has in their lifetime. Consequently, the housing allowance became an incentive for home ownership and a provision for retirement that wouldn’t be available if a pastor simply lived in a parsonage his whole career.

Stories like this one can bring about changes in the tax law, however. There is, I think, a reasonable argument for a housing allowance (vs a parsonage), but Copland’s case is a little extreme.

Churches are automatically tax-exempt and don’t have to become 501c3 organizations or file a 990 tax exempt return. So the only accountability is internal.

I don’t know what the answer is to deal with corruption like Copeland’s. If the government got involved, who is to say that it wouldn’t lead to a slippery slope of the government meddling in the affairs of other churches simply because it didn’t like it’s teaching? Senator Grassley tried to do something and it went nowhere.

….is for Copeland’s congregation to decide that prosperity theology is a pile of horse manure, no? Let’s face facts; the annual tax on the home is small potatoes compared to his income fleeced from gullible members and contributors, and that at the cost of the Gospel. If prosperity theology were Biblical, God owes the disciples, prophets, and Christ one big ‘ol apology, doesn’t He?

Side note; it looks impressive from a distance, but in the pictures I’ve seen, it appears he didn’t waste too much money on architects to make it beautiful or functional.

There should be a formula and a cap on what can be included for a parsonage. This just makes sense. It is extremely easy to abuse in America’s model.

Reading again, I realize the issue here appears to be property taxes, not taxable income. If Copeland owns this home (as the article suggests), I’m baffled as to why he pays no property taxes. If the church owns the home, exemption from property tax is normal.

I own my home, helped significantly by the housing allowance provision which makes income used to provide my housing exempt from income taxes. (Both State and Federal) However, I pay the same property tax as every other homeowner in my community. Copeland seems to have found a way to have his cake and eat it too. If I understand the article correctly, he owns his home, but is exempt from property tax. That doesn’t make sense to me.

Jonathan: Better be careful. Some at SI don’t like slippery slope arguments.

There should be a formula and a cap on what can be included for a parsonage. This just makes sense. It is extremely easy to abuse in America’s model.

What kind of formula and who gets to set it? And how do you account for the differences in churches and areas? A church in a highpriced urban area may have had a parsonage for 100 years and be too small to afford taxes given the surrounding market. A church may have living quarters attached to the main building which is used not just for living, but for counseling, for classes, for meetings.

Perhaps the current setup is extremely easy to abuse but getting the government involved in church finances is a bad idea and the cost is way higher than whatever small amount might be gained. I don’t think the few cases of abuse justify the high price of governmental involvement.

[Larry]

I don’t think the few cases of abuse justify the high price of governmental involvement.

So a little fraud is OK, then?

The question is complicated, to be sure, by factors such as those you mentioned. That doesn’t mean that the government should allow the status quo to continue.

Per Wally’s comment in response to Jonathan, it’s not a slippery slope fallacy, but rather a change of principle. Churches, and some employees thereof, are exempt from certain taxes,varying by state, because “the power to tax is the power to destroy”. that can be problematic in the context of the first Amendment—you don’t want some minor assessor driving unwanted pastors and churches out of town by taxing his home up the wazoo. Hence church buildings are not generally subject to property tax (it’s also hard to assess them accurately, which is another reason), and pastors have a couple of tax breaks that others do not. I’m personally ambivalent about exemptions for pastor owned houses—those are generally easier to assess, and easy to note “hey, this is a completely ridiculous assessment that’s not consistent with how this was assessed before this pastor was living there.”

I would call it a “change of principle” if states and the federal government markedly start changing their approaches to how churches and pastors are, or are not, taxed. And again, the big issue here is not whether this pastor is paying property tax on his property, but that he’s preaching a fraudulent gospel.

I used the term “slippery slope” because Jonathan used the term “slippery slope”. Of course, calling it something else solves the issue.

So a little fraud is OK, then?

Seriously, Don? Come on. You are better than that.

Of course a little fraud isn’t okay.

[Larry]

So a little fraud is OK, then?

Seriously, Don? Come on. You are better than that.

Of course a little fraud isn’t okay.

Then why did you say:

[Larry]

I don’t think the few cases of abuse justify the high price of governmental involvement.

I don’t think a government set of controls for excessive abuses is a slippery slope or an intrusion on the church. I think they could easily setup something like a pastor’s home/or parsonage is exempt from property taxes if the properties assessed value is less than 3 times the average assessed value within the given zip code.

The median house price (I know this is not the same as the assessed value, but assessed value is better legally as it takes into account rising home prices and such from a tax basis), in the zip code where Kenneth Copeland’s house is located is about $425K. That would mean that if a parsonage or pastor’s home is less than $1.075M, it is free from property tax. I am not sure that would be intrusive and it would eliminate these massive properties that some of these individuals have.