What is the foreign housing exclusion/deduction and what is considered qualified housing expenses?

Certain taxpayers may be able to exclude employer-provided housing amounts and deduct housing costs not provided by the employer. The exclusion is limited to the extent that it exceeds 16 percent of the maximum exclusion. Qualified housing expenses include:

• Rent
• The fair rental value of housing provided in kind by your employer
• Repairs
• Utilities (other than telephone charges)
• Real and personal property insurance
• Nondeductible occupancy taxes
• Nonrefundable fees for securing a leasehold
• Rental of furniture and accessories
• Residential parking

Qualified expenses do not include deductible interest and taxes, housing expenses claimed on Form 8829, the principal portion of your mortgage payment, furniture purchases, capital improvements or the cost of domestic labor.