Section 911 Housing Deduction Daily Limit Allocator: Calculate Your 2026 Expat Housing Deduction

What Is the Section 911 Housing Deduction?

The Section 911 housing deduction allows self-employed U.S. citizens and resident aliens living abroad to deduct certain housing expenses from their taxable income. For employees, the same benefit is structured as a housing exclusion. Both are claimed on Form 2555.

The deduction covers housing costs above a base amount (16% of the Foreign Earned Income Exclusion limit) and is capped at a housing expense limitation (30% of FEIE) or a location-specific cap for high-cost cities. For 2026, the FEIE maximum is $132,900, making the base housing amount $21,264 and the standard housing cap $39,870.

The key distinction: employees exclude housing amounts from gross income, while self‑employed individuals deduct housing expenses on their return. Both reduce income tax liability, but neither reduces self‑employment tax.

Learn more about the FEIE →

Who Qualifies for the Foreign Housing Deduction?

To claim the Section 911 housing deduction, you must first qualify for the Foreign Earned Income Exclusion. This requires meeting one of two tests:

1. Bona Fide Residence Test — You must be a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year.
2. Physical Presence Test — You must be physically present in a foreign country for at least 330 full days during any 12‑month period.

In addition to meeting one of these tests, your tax home must be in a foreign country for the qualifying period. You cannot claim the deduction for periods when your tax home is in the United States.

For self‑employed individuals specifically:

• Your housing expenses must be paid from self‑employment earnings
• You must file Schedule C with your return
• The deduction is claimed in Part IX of Form 2555
• The deduction reduces ordinary income but not self‑employment tax

Physical Presence Test guide →

How the Section 911 Housing Deduction Is Calculated

The housing deduction calculation follows a five‑step process. The allocator tool above does this math instantly, but understanding the formula helps you verify your numbers.

1. Step 1: Determine your FEIE limit for the tax year
   For 2026, the FEIE maximum is $132,900. This figure is set annually by the IRS.
2. Step 2: Calculate your base housing amount
   The base amount is 16% of the FEIE limit, prorated by your qualifying days:
   Base Housing Amount = (FEIE Limit × 16%) × (Qualifying Days ÷ Days in Tax Year)
3. Step 3: Determine your housing expense limitation
   The general limitation is 30% of the FEIE limit, also prorated:
   Housing Expense Limitation = (FEIE Limit × 30%) × (Qualifying Days ÷ Days in Tax Year)
4. Step 4: Find your location‑specific cap
   If you live in a high‑cost city, your cap may be higher than the standard limitation. Use the IRS Notice 2026‑25 table or the city lookup above.
5. Step 5: Calculate your allowable deduction
   Housing Cost Amount = Total Qualified Expenses − Base Housing Amount
Allowable Deduction = MIN(Housing Cost Amount, Limitation, Location Cap)

Total housing expenses: $60,000
Base housing amount: $21,264
Housing cost amount: $38,736
London cap: $66,000
Limitation: $39,870
Allowable deduction: $38,736 (limited by housing cost amount)

2026 Location-Specific Housing Caps

The IRS publishes annual housing cost limitations for high‑cost foreign locations. For 2026, IRS Notice 2026‑25 lists 137+ cities with caps exceeding the standard $39,870 limit.

The cap for your city is the maximum housing expense amount you can use in the calculation. If your city is not listed, the standard cap of $39,870 applies.

View full list of 137+ high-cost cities →

Housing Exclusion vs. Deduction — Which One Applies to You?

Many expats confuse the foreign housing exclusion with the foreign housing deduction. The difference is straightforward once you understand your employment status.

Employees claim the housing exclusion. If your employer provides housing allowances or reimbursements, you can exclude those amounts from your gross income using Form 2555, Part VI. The exclusion reduces your taxable wages dollar‑for‑dollar.

Self‑employed individuals claim the housing deduction. If you pay housing expenses from your self‑employment earnings, you deduct those costs on Form 2555, Part IX. The deduction reduces your adjusted gross income but does not reduce self‑employment tax.

Self-employed housing deduction guide →

Partial‑Year Proration — How to Calculate for Less Than a Full Year

If you lived abroad for only part of the tax year, you must prorate all housing deduction amounts. The base housing amount, expense limitation, and location cap are all reduced proportionally based on your qualifying days.

The proration formula uses the number of qualifying days divided by the total days in the tax year (365 for standard years, 366 for leap years).

FEIE limit: $132,900
Qualifying days: 200
Total housing expenses: $45,000
Singapore cap: $96,200

Prorated base: ($132,900 × 16%) × (200 ÷ 365) = $21,264 × 0.548 = $11,653
Prorated limitation: ($132,900 × 30%) × (200 ÷ 365) = $39,870 × 0.548 = $21,845
Prorated Singapore cap: $96,200 × 0.548 = $52,718

Housing cost amount: $45,000 − $11,653 = $33,347
Allowable deduction: MIN($33,347, $21,845, $52,718) = $21,845

Partial year housing exclusion calculator →

Why This Section 911 Housing Deduction Allocator Is Different

The IRS provides tables. Tax blogs provide explanations. No one provides a tool that actually does the math for you — until now.

This page is built around a single purpose: helping you calculate your exact Section 911 housing deduction without manual spreadsheets, PDF scrolling, or guesswork. Here is what makes this allocator different from every other resource on the web.