Foreign Housing Exclusion Calculator — Form 2555 Lines 28–36

The foreign housing exclusion (IRC §911(c)) is a supplement to the Foreign Earned Income Exclusion (FEIE) that allows qualifying US expats to exclude additional amounts from gross income for qualified housing expenses paid while living abroad. It covers costs above a base amount (FEIE × 16%) up to an IRS-set cap that varies by city. Like the FEIE, it requires meeting either the Physical Presence Test or the Bona Fide Residence Test and is reported on Form 2555, lines 28–36.

Qualified housing expenses include: rent, utilities (excluding telephone), residential parking, household repairs, real and personal property insurance, and occupancy taxes. They do NOT include mortgage principal or interest payments, lavish or extravagant expenses, or domestic labor costs. Only the portion attributable to your tax home abroad qualifies.

The base amount is automatically derived as FEIE × 16% per IRC §911(c)(1)(B)(ii). The cap is set by the IRS annually via an IRS Notice that lists high-cost cities and their specific dollar limits. If your city is not on the IRS high-cost city table, the default cap is 30% of the FEIE limit for the year. Both the base and cap are prorated by the number of days you were abroad (daysAbroad ÷ 365), matching Form 2555 lines 28–36.

Yes, but with an important distinction. For employees, the housing exclusion reduces gross income (an exclusion). For self-employed individuals, it becomes a housing deduction reported on Form 2555, Part IX, reducing net self-employment income. The deduction is limited to your net foreign earned income after the FEIE, so you cannot use it to create a loss. The underlying calculation of the housing amount is the same regardless of employment type.