H.R. 1 – the House’s version of tax reform – has some negative issues for higher education.  One of these is a limitation on “employer-provided housing.”




Saltwater Christian College (SCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and section 170(b)(1)(A)(ii).  SCC’s president lives in a college-owned residence.  The value of this home has historically been tax-free to the president in accordance with the rules of Internal Revenue Code section 119.

SCC’s CFO called us to talk about proposed tax reform and we got on the subject of their “president’s residence.”  We related that this benefit would be limited if a provision of H.R. 1 becomes law.  Amounts above the limitation amount(s) could be taxable to the president in future years.  Ultimately, the housing limitation would be:

  1. Maximum benefit of $50,000 per year.
  2. The $50,000 benefit would be phased out for married filing joint taxpayers between adjusted gross income levels of $120,000 and $220,000 (for 2017, adjusted for inflation annually).

This and other proposed measures in H.R. 1 could significantly increase the amount of compensation reported by some of SCC’s executive team on Form 990, Part VII, Section A.



From Tax Cuts and Jobs Act (H.R. 1) Summary:

Sec. 1401. Limitation on exclusion for employer-provided housing.

Current law: Under current law, housing and meals provided to an employee and the employee’s spouse or dependents for the convenience of the employer are excluded from income if the meals are on the business premises of the employer and the employee is required to accept lodging on the premises of the employer as a condition of employment. In the case of educational institutions, the value of housing provided to their employees also is excluded to the extent the rent paid by the employee is at least the lesser of five percent of the lodging’s appraised value or the average of the rent paid by individuals (other than employees or students of the educational institution) for comparable lodging provided by the educational institution.

Provision: Under the provision, the exclusion for housing provided for the convenience of the employer and for employees of educational institutions would be limited to $50,000 ($25,000 for a married individual filing a joint return) and would phase out for highly compensated individuals (income of $120,000 for 2017, as adjusted for inflation) at a rate of one dollar for every two dollars of adjusted gross income earned by the individual beyond the statutory threshold of being highly compensated. The exclusion also would be limited to one residence.The provision would be effective for tax years beginning after 2017.



  • Employee housing provided by an education institution has historically been a tax-free benefit if the tenets of I.R.C. section 119 are met.
  • Generally, the provisions of I.R.C. section 119 are: 1) condition of employment, 2) for the convenience of the employer, and 3) on the business premises.
  • R. 1 proposes changes and limitations to the housing benefits under I.R.C. section 119.
  • Has your institution considered the potential future tax cost of these changes?


Specific questions? Email Dave Moja

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.