Beyond the foreign earned income exclusion, expats can separately exclude housing costs abroad above a floor amount, up to a cap.
How it works
Your housing expenses are capped at the applicable limit (standard or a higher city-specific figure), then the $21,264 base housing amount is subtracted from that capped figure to find the excludable housing cost amount.
What this does not include
This does not include the self-employed version of this benefit, which is a deduction rather than an exclusion and has different mechanics for how it interacts with the foreign earned income exclusion.
How to use this calculator
- Enter your annual foreign housing expenses and the applicable housing expense cap.
Frequently asked questions
Why is there a “base housing amount” floor?
It reflects the assumption that any taxpayer, even one living in the U.S., would incur some baseline housing cost — only the excess above that baseline is treated as a special expat benefit.
Do certain cities get a higher cap?
Yes — the IRS publishes location-specific housing cost limitations for many high-cost expat cities, ranging well above the standard cap in cities like Hong Kong, London, or Sydney.
Can I claim both the FEIE and the housing exclusion?
Yes — they’re designed to work together, covering earned income and housing costs as two separate pieces of an expat’s overall tax picture.
