The Foreign Housing Exclusion (FHE)
And how can you use it to save/get back thousands of your hard earned dollars.
In conjunction with the FEIE - you have the Foreign Housing Exclusion (FHE)
https://www.irs.gov/individuals/international-taxpayers/foreign-housing-exclusion-or-deduction
A tax benefit that allows taxpayers to exclude certain amounts of their foreign housing expenses from their taxable income. If you're living and working abroad and incurring substantial housing expenses, this exclusion can help you reduce your overall tax burden.
To qualify for the FHE, you must first qualify for the Foreign Earned Income Exclusion (FEIE). This means that you must establish a tax home in a foreign country and meet either the Physical Presence Test or the Bona Fide Residence Test. Once you have met these requirements, you can then apply for the FHE.
To calculate your FHE, you must first determine your eligible housing expenses. These expenses may include rent, utilities, property insurance, and other related costs. However, the exclusion only applies to expenses that exceed a certain threshold amount, which is based on your location and your income. The IRS provides tables that show the maximum allowable housing expenses for each location and income level.
*Again - Just use Turbo Tax/ they provide all this info for you
Once you have determined your eligible housing expenses, you can then calculate your FHE by subtracting the base amount from your total eligible expenses. The base amount is a percentage of your FEIE, which varies depending on your income level. The remaining amount can then be excluded from your taxable income, reducing your overall tax liability.
* You will have to add your foreign address onto your tax forms.
From the information, I was given in Turbotax… Airbnb is not counted as rent. Its considered a travel expense.
But the FHE is great for long-term expats that sign leases.
Remember - Nothing in this post is financial advice. Do your own research. I just want point you in the right direction