IRS Sec 911 Housing Cost Amounts Eligible for Exclusion or Deduction for 2006


The U.S. Treasury Department issued a Notice concerning Sec 911 and housing costs.

The limitation on housing expenses eligible for exclusion or deduction for Vietnam is:

Country Location Daily Limit Yearly Limit
Vietnam Hanoi US$ 122.22 US$ 46,800

Ho Chi Minh City information has not yet been provided, and AmCham will contact Treasury about this.

Part III – Administrative, Procedural, and Miscellaneous

Determination of housing cost amount eligible for exclusion or deduction.

Notice 2006-87

This notice provides adjustments to the limitation on housing expenses for purposes of section 911 of the Internal Revenue Code (Code) for specific locations, on the basis of geographic differences in housing costs relative to housing costs in the United States.

Section 911(a) of the Code allows a qualified individual to elect to exclude from U.S. gross income the foreign earned income and housing cost amount of such individual. Section 911©(1), as amended by section 515 of the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), defines the term “housing cost amount” as an amount equal to the excess of (A) the housing expenses of an individual for the taxable year to the extent such expenses do not exceed the amount determined under section 911©(2), over (B) 16 percent of the exclusion amount (computed on a daily basis) in effect under section 911(b)(2)(D) for the calendar year in which such taxable year begins ($67.73 per day for 2006, or $82,400 for the full year), multiplied by the number of days of that taxable year within the applicable period described in section 911(d)(1). The applicable period is the period during which the individual meets the tax home requirement of section 911(d)(1) and either the bona fide residence requirement of section 911(d)(1)(A) or the physical presence requirement of section 911(d)(1)(B). Assuming that the entire taxable year of a qualified individual is within the applicable period, the section 911©(1)(B) amount for 2006 is $13,184 ($82,400 x .16).

Section 515 of TIPRA also added a new section 911©(2)(A) of the Code, which limits the housing expenses taken into account in section 911©(1)(A) to an amount equal to the product of – (i) 30 percent (adjusted as may be provided under the Secretary’s authority under section 911©(2)(B)) of the amount in effect under section 911(b)(2)(D) for the calendar year in which the taxable year of the individual begins, multiplied by (ii) the number of days of that taxable year within the applicable period described in section 911(d)(1). Thus, for the year 2006, a qualified individual whose entire taxable year is within the applicable period is limited to maximum housing expenses of $24,720 ($82,400 x .30). Accordingly, the maximum housing cost amount a qualified individual may exclude from income in year 2006 is $11,536 ($24,720 – $13,184). The TIPRA changes apply to taxable years beginning after December 31, 2005.

To the extent the housing cost amount of any individual for any taxable year is not attributable to employer provided amounts, section 911©(4)(A) of the Code provides that such amount shall be treated as a deduction in computing adjusted gross income. Under section 911©(4)(B), however, the amount of this deduction is limited to the excess of the foreign earned income of the individual for the taxable year over the amount of such income excluded from gross income under section 911(a).

In addition, section 911(d)(7) of the Code prohibits the total amount excluded or deducted under section 911 for the taxable year from exceeding the individual’s foreign earned income for such year. Further, section 911(b)(1)(B) excludes from the definition of foreign earned income certain amounts, including amounts paid by the United States or an agency thereof to an employee of the United States or an agency thereof. As a result, the exclusion or deduction from gross income of the housing cost amount under section 911 is not available to an individual whose earned income consists solely of amounts paid by the United States or an agency thereof to an employee of the United States or an agency thereof.

Section 911©(2)(B) of the Code authorizes the Secretary to issue regulations or other guidance to adjust the percentage under section 911©(2)(A)(i) based on geographic differences in housing costs relative to housing costs in the United States. The Joint Explanatory Statement of the Committee of Conference accompanying TIPRA states the conferees’ intent that the Secretary be permitted to use publicly available data, such as the Quarterly Report Indexes published by the U.S. Department of State or any other information that the Secretary deems reliable, in making adjustments. See H.R. Conf. Rep. No. 304, 109th Cong., 1st Sess. 309 (2005).

Accordingly, the following table , which was derived from the Living Quarters Allowance table prepared by the Office of Allowances of the U.S. Department of State as of August 20, 2006, identifies locations within countries with high housing costs relative to housing costs in the United States, and provides an adjusted limitation on housing expenses for a qualified individual incurring housing expenses in one or more of these high cost localities in 2006 to use (in lieu of the otherwise applicable limitation of $24,720) in determining his or her housing expenses under section 911©(2)(A) of the Code. The table will be updated each year by administrative pronouncement (e.g., through issuing a notice, amending Form 2555 or the instructions thereto, or by making a revised table available on the IRS website at, beginning in 2007, based on the living quarters allowance for employees of the U.S. Department of State who are in Group 2, with family, contained in the first Living Quarters Allowance table released in that calendar year by the Office of Allowances of the U.S. Department of State.

A qualified individual incurring housing expenses in one or more of the high cost localities identified above for the year 2006 may use the adjusted limit provided in the table (in lieu of $24,720) in determining his or her housing cost amount on Form 2555, Foreign Earned Income. A qualified individual who does not incur housing expenses in a locality identified above for the year 2006 is limited to maximum housing expenses of $67.73 per day ($24,720 per year) in determining his or her housing cost amount.


This notice is effective for taxable years beginning on or after January 1, 2006.


The principal author of this notice is Paul J. Carlino of the Office of Associate Chief Counsel (International). For further information regarding this notice contact Mr. Carlino at (202) 622-3840 (not a toll-free call).

Request for Comments

Comments are requested on the method identified in the notice for annual updates to the list contained in this notice. If a taxpayer believes that the average housing costs for a specific location differ significantly from the amount provided in this notice, the IRS and Treasury Department are particularly interested in information on housing costs that can be verified through publicly available data. Comments may be submitted to CC:PA:LPD:PR (Notice 2006-87), Room 5203, Internal Revenue Service, PO Box 7604, Washington, DC 20044. Submissions may also be hand-delivered Monday through Friday between the hours of 8 a.m. and 4:30 p.m. to Crystal Mall 4, room 108, 1901 South Bell Street, Arlington, VA 22202, Attn: CC:PA:LPD:PR (Notice 2006-87). Submissions may also be sent electronically via the internet to the following email address: [email protected] Include the notice number (Notice 2006-87) in the subject line.

CountryLocationLimitation on Housing Expenses (daily)Limitation on Housing Expenses (full year)
ArgentinaBuenos Aires120.27 43,900
AustriaVienna74.52 27,200
Bahamas, TheNassau136.16 49,700
BahrainBahrain120.55 44,000
BarbadosBarbados103.29 37,700
BelgiumBrussels124.93 45,600
BelgiumSHAPE/Chievres91.23 33,300
BermudaBermuda71.78 26,200
Bosnia-HerzegovinaSarajevo74.52 27,200
BrazilBrasilia86.30 31,500
BrazilRio de Janeiro96.16 35,100
BrazilSao Paolo127.40 46,500
CanadaOttawa107.40 39,200
CanadaCalgary73.42 26,800
CanadaHalifax68.49 25,000
CanadaLondon, Ontario70.41 25,700
CanadaMontreal138.90 50,700
CanadaToronto113.70 41,500
CanadaVancouver106.85 39,000
CanadaVictoria76.71 28,000
CanadaWinnipeg68.22 24,900
ChileSantiago96.71 35,300
ColombiaBogota148.22 54,100
ColombiaAll cities other than Bogota and Barranquilla123.01 44,900
Costa RicaSan Jose71.78 26,200
Dominican RepublicSanto Domingo110.96 40,500
EcuadorQuito81.92 29,900
EcuadorGuayaquil84.38 30,800
El SalvadorSan Salvador69.04 25,200
FranceParis217.26 79,300
FranceLe Havre97.26 35,500
FranceLyon139.45 50,900
FranceMarseille117.81 43,000
FranceMontpellier115.34 42,100
GermanyBerlin132.05 48,200
GermanyBad Aibling92.05 33,600
GermanyBaumholder98.08 35,800
GermanyBerchtesgaden70.14 25,600
GermanyDarmstadt107.67 39,300
GermanyFrankfurt am Main112.88 41,200
GermanyFriedberg86.03 31,400
GermanyGarmisch-Partenkirchen93.15 34,000
GermanyGeilenkirchen73.97 27,000
GermanyGermersheim81.64 29,800
GermanyGiessen84.38 30,800
GermanyGrafenwoehr69.86 25,500
GermanyHanau116.44 42,500
GermanyHannover80.55 29,400
GermanyHeidelberg107.40 39,200
GermanyKaiserslautern, Landkreis121.64 44,400
GermanyMunich115.62 42,200
GermanyNuernberg68.22 24,900
GermanyStuttgart113.97 41,600
GermanyWiesbaden129.04 47,100
GermanyWuerzberg93.42 34,100
GermanyAll cities other than Augsburg, Bad Aibling, Bad Kreuznach, Baumholder, Berchtesgaden, Berlin, Bonn, Bremen, Bremerhaven, Cologne, Darmstadt, Duesseldorf, Flensburg, Frankfurt am Main, Friedberg, Garmisch-Partenkirchen, Geilenkirchen, Germersheim, Giessen, Grafenwoehr, Hamburg, Hanau, Hannover, Heidelberg, Heilbron, Kaiserslautern, Landkreis, Karlsruhe, Kerpen, Koblenz, Leipzig, Muenster, Munich, Nuernberg, Osterholz-Scharmbeck, Rheinberg, Stuttgart, Wiesbaden, Worms, and Wuerzburg.92.60 33,800
GreeceAthens86.85 31,700
GreeceThessaloniki84.11 30,700
GuatemalaGuatemala City103.01 37,600
Holy See, TheHoly See, The146.58 53,500
Hong KongHong Kong313.15 114,300
HungaryBudapest89.04 32,500
IrelandLimerick69.04 25,200
ItalyRome146.58 53,500
ItalyCatania75.89 27,700
ItalyGenoa103.29 37,700
ItalyGioia Tauro85.48 31,200
ItalyLeghorn91.78 33,500
ItalyMilan218.63 79,800
ItalyNaples120.82 44,100
ItalyPordenone-Aviano100.82 36,800
ItalySardinia74.79 27,300
ItalyTurin109.32 39,900
ItalyVerona69.86 25,500
ItalyVicenza101.92 37,200
ItalyAll cities other than Avellino, Brindisi, Catania, Florence, Gaeta, Genoa, Gioia Tauro, Leghorn, Milan, Naples, Nettuno, Pordenone-Aviano, Rome, Sardinia, Turin, Verona, and Vicenza.84.11 30,700
JamaicaKingston112.88 41,200
JapanTokyo234.79 85,700
JapanAkizuki69.04 25,200
JapanGotemba75.07 27,400
JapanMisawa69.32 25,300
JapanNagoya80.00 29,200
JapanOkinawa Prefecture123.56 45,100
JapanOsaka-Kobe78.08 28,500
JapanSasebo81.10 29,600
JapanTokyo-to99.73 36,400
JapanYokohama131.23 47,900
JapanYokosuka113.42 41,400
KoreaSeoul153.97 56,200
KoreaChinhae78.90 28,800
KoreaChunchon73.70 26,900
KoreaKwangju78.08 28,500
KoreaOsan AB88.77 32,400
KoreaPusan81.92 29,900
KoreaTaegu92.88 33,900
KoreaTongduchon72.33 26,400
KoreaUijongbu101.92 37,200
KoreaWaegwan74.25 27,100
KoreaAll cities other than Changwon, Chinhae, Chunchon, Kunsun, Kwangju, Osan AB, Pusan, Seoul, Taegu, Tongduchon, Uijongbu, and Waegwan.83.29 30,400
KuwaitKuwait City163.84 59,800
KuwaitAll cities other than Kuwait City146.85 53,600
LuxembourgLuxembourg120.27 43,900
MacedoniaSkopje96.99 35,400
MalaysiaKuala Lampur96.71 35,300
MalaysiaAll cities other than Kuala Lampur92.33 33,700
MaltaMalta100.00 36,500
MexicoMexico City102.74 37,500
NetherlandsHague, The150.41 54,900
NetherlandsAmsterdam144.93 52,900
NetherlandsBrunssum83.01 30,300
NetherlandsRotterdam105.48 38,500
NetherlandsAll cities other than Amsterdam, Brunssum, Coevorden, the Hague, Margraten, and Rotterdam. 76.71 28,000
Netherlands AntillesAruba90.41 33,000
New ZealandWellington73.15 26,700
New ZealandAuckland77.26 28,200
NorwayOslo70.96 25,900
NorwayStavanger90.41 33,000
NorwayAll cities other than Oslo and Stavanger.91.78 33,500
PanamaPanama City88.22 32,200
Peru Lima74.79 27,300
PortugalLisbon133.70 48,800
RussiaMoscow75.34 27,500
RwandaKigali86.30 31,500
SingaporeSingapore117.53 42,900
SpainMadrid99.18 36,200
SpainRota85.48 31,200
SpainValencia102.74 37,500
SwitzerlandBern139.45 50,900
SwitzerlandGeneva192.60 70,300
SwitzerlandAll cities other than Bern and Geneva.90.14 32,900
ThailandBangkok100.27 36,600
TurkeyAnkara84.93 31,000
TurkeyIzmir-Cigli86.58 31,600
UkraineKiev76.99 28,100
United KingdomLondon197.53 72,100
United KingdomBath103.84 37,900
United KingdomBristol78.08 28,500
United KingdomCambridge109.32 39,900
United KingdomCaversham187.40 68,400
United KingdomCheltenham111.51 40,700
United KingdomFairford88.49 32,300
United KingdomFarnborough130.14 47,500
United KingdomFelixstowe110.96 40,500
United KingdomHarrogate110.41 40,300
United KingdomHigh Wycombe157.53 57,500
United KingdomLakenheath140.00 51,100
United KingdomLoudwater133.42 48,700
United KingdomOxfordshire79.18 28,900
United KingdomRochester101.37 37,000
United KingdomWiltshire96.16 35,100
United KingdomAll cities other than Bath, Belfast, Birmingham, Bristol, Brough, Bude, Cambridge, Caversham, Chelmsford, Cheltenham, Chicksands, Dunstable, Edinburgh, Edzell, Fairford, Farnborough, Felixstowe, Ft. Halstead, Glenrothes, Harrogate, High Wycombe, Hythe, Lakenheath, London, Loudwater, Nottingham, Oxfordshire, Rochester, Welford, West Byfleet, and Wiltshire.96.16 35,100
VenezuelaCaracas143.56 52,400
VietnamHanoi128.22 46,800