Housing expense limit adjustments, foreign locations | KPMG | GLOBAL

Notice 2016-21: Housing expense limit adjustments, foreign locations for 2016

IRS housing expense limits, foreign locations

The IRS today released an advance version of Notice 2016-21 providing the adjustments to the limitation on housing expenses, under section 911, for specific locations for 2016.


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The adjustments are made on the basis of geographic differences in housing costs relative to housing costs in the United States—thus providing an increased amount that a qualified individual can elect to exclude from gross income as a housing cost amount for purposes of section 911.

Notice 2016-21 [PDF 106 KB] provides a table with the adjusted limitations on housing expenses for the foreign locations (in lieu of the otherwise applicable limitation of $30,390) for 2016.

Election to apply 2016 adjusted limitations to 2015

Today's notice is effective for tax years beginning on or after January 1, 2016. 

For some locations, however, the limitation on housing expenses provided in today's notice may be greater than the limitation on housing expenses provided in the table of adjusted limitations for 2015 (as provided last year in Notice 2015-33). Accordingly, Notice 2016-21 provides that a qualified individual, incurring housing expenses in such a location during 2015, may elect to apply the 2016 adjusted housing limitations to the tax year beginning in 2015.

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