Does Your Church Have a Parsonage?

Yes, our church does have a parsonage and we do use it as intended, for our pastor.  (Bethel CRC in Zeeland)

Have any of you sold a parsonage? Is there anything that you could pass along that would be beneficial. How did this affect your non-profit status, if at all? How did your congregation take the news of selling the parsonage? Is there something that you wished you  knew before you sold?

Our church (New Life CRC Highland, IN) has a parsonage.  They are less popular than they used to be but some ministers like them (many others do not).  Our previous minister lived in the parsonage (he left to take a new call in the fall) so it is currently unoccupied.  We haven't decided if we'll retain it.

If the property was used for another purpose, such as renting it out, it would be excluded from Unrelated Business Income Tax (UBIT) based on IRS Publication 598. (If an exempt organization regularly carries on a trade or business not substantially related to its exempt purpose, except that it provides funds to carry out that purpose, the organization is subject to tax on its income from that unrelated trade or business.") General ministry outreach plans, though, would be consistent with the general purpose of the church and also be exempt from any taxation.  You may also need to consider the potential impact to property taxes if the parsonage is used for a purpose outside the church's mission and what the local and state government requires.

If the parsonage were to be sold, there would generally be no effect on tax exempt status. As long as the church does not regularly participate in the business of selling property, a gain on the sale of a parsonage would not be taxable. However, if a church frequently sells property and is in the business of selling property to a customer, the church will be subject to UBIT.

As to how the congregation will take the news, you may want to check your church's articles of incorporation bylaws. Some require congregational approval before a sale. Even if not required, it might be wise to still solicit the congregation's perspective and explain any plans before they are executed.

I have served four different churches in Canada, first one had a parsonage on the church property which made our 10 week summer stint there as a student and family very easy to accommodate.  Second congregation did not have one.  We were helped into buying a house after renting a place for one year.  The third congregation did own a parsonage on the church property but they advised us not to live there as they didn't want to have to renovate it for our family size and also felt living there would isolate the pastor from the local community and have him too much always at church.  So we continued in the journey of home ownership.  The present congregation does not have a parsonage and we were able to buy a home nearby here as well.  That was all before the price of home ownership went crazy in Canada.  I am not sure how new pastors coming out Seminary are doing with finding adequate housing  if the church has no options for them.  Times of late have changed significantly as far as affordability of housing in most of Canada.  Would a parsonage help?  Perhaps if somehow use of a parsonage would be in such a way that the equity the church gains on such a house is somehow shared with the pastors using it.  Normal practice has been that if a church offers use of a parsonage, the compensation package is lower.  That is not helpful in the long run for future housing needs.  

And our short experience living for a summer in the parsonage was also a taste of having your family's home being overseen by a committee and scrutinized by a few too many congregants who seem to feel the house is theirs house more than our home.  As well meaning as people believe they are, it was things like "I see you left a light on in the house all last night, the church pays the hydro bill you know."  Or "Oh you have an outlet not working? Don't touch it, we will bring that up at the next committee meeting and decide what to do."  I am glad that summer was the total extent of parsonage experience for me :)

Colin

Parsonages are most commonly used for pastor family housing. I know of a handful of churches that have converted them to youth buildings or refugee housing and such. But that’s rare.

I was active in CRC ministry from 1979 to 2018. 39 years. 3/4 of that was in parsonages. It was a blessing. 
An earlier comment noted the high cost of housing in Canada. A parsonage is essential in high housing cost markets, unless you want to only consider well established wealthier pastors. They are also great in low demand markets such as rural communities, where houses can be hard to sell and unlikely to appreciate much in value. 
The first house I bought in 2004 for $300,000 was worth just over $200,000 in 2010. My advice to young pastors is to not let anyone tell you that owning property is the secret to wealth. You’ll owe property taxes (currently $6000/year for me) and be responsible for all repairs and maintenance and utilities. Say around $13,000 per year. In more cases than not I’d welcome the parsonage 
 

Our church (Holland Marsh CRC outside Newmarket, ON) has a parsonage and we use it (I live here). 

I'm 34 years old and it is pretty much impossible for me to get into the housing market anywhere in Canada at the present, even in relatively affordable areas. I was born at the wrong time, so the idea of building equity by buying a house isn't possible. The parsonage is pretty much the only reason my wife and I were able to move here and serve this congregation. If/when I move to a different congregation, it will either need to have a parsonage, or I will need to use a housing allowance to pay for a rental. I personally would strongly discourage churches from selling their parsonage. Problems with administration of the parsonage are real and take work, but to me that's a better problem than not being able to find a place for your pastor to live.