The Foreign Housing Exclusion allows US taxpayers living abroad to deduct or exclude the cost of rental housing abroad from their gross income on their US tax return.
The foreign housing exclusion and deduction is an allowance for taxpayers who live and work in a foreign country.
You must qualify under a physical presence test or bona fide residency test. In addition, to use the FHE, your housing costs must exceed 16% of the FEIE amount for a given tax year.
Rent and utilities are qualified expenses, such as home repairs, parking, real and personal property insurance and ancillary rent.
For tax year 2022, the maximum housing exclusion amount is $15,680.
The FHE amount is equal to your total foreign housing expenditure (up to 30% of FEIE) for the year, minus the base housing amount (which is equal to 16% of FEIE).