Internal Revenue Bulletin:  2007-40 

October 1, 2007 

Notice 2007-77

Determination of Housing Cost Amounts Eligible for Exclusion or Deduction for 2007


SECTION 1. PURPOSE

This notice provides adjustments to the limitation on housing expenses for purposes of section 911 of the Internal Revenue Code (Code) for specific locations for 2007. These adjustments are made on the basis of geographic differences in housing costs relative to housing costs in the United States.

SECTION 2. BACKGROUND

Section 911(a) of the Code allows a qualified individual to elect to exclude from gross income the foreign earned income and housing cost amount of such individual. Section 911(c)(1) 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(c)(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 ($70.44 per day for 2007, or $85,700 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(c)(1)(B) amount for 2007 is $13,712 ($85,700 x .16).

Section 911(c)(2)(A) of the Code limits the housing expenses taken into account in section 911(c)(1)(A) to an amount equal to (i) 30 percent (adjusted as may be provided under the Secretary’s authority under section 911(c)(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, under this general limitation, a qualified individual whose entire taxable year is within the applicable period is limited to maximum housing expenses of $25,710 ($85,700 x .30) in 2007.

Section 911(c)(2)(B) of the Code authorizes the Secretary to issue regulations or other guidance to adjust the percentage under section 911(c)(2)(A)(i) based on geographic differences in housing costs relative to housing costs in the United States. Pursuant to this authority, the Internal Revenue Service (IRS) and the Treasury Department published Notice 2006-87, 2006-43 I.R.B. 766, and Notice 2007-25, 2007-12 I.R.B. 760, to provide adjustments to the limitation on housing expenses for 2006 for qualified individuals incurring housing expenses in countries with high housing costs relative to housing costs in the United States.

SECTION 3. TABLE OF ADJUSTED LIMITATIONS FOR 2007

The following table provides adjusted limitations on housing expenses (in lieu of the otherwise applicable limitation of $25,710) for 2007.

Country Location Limitation on Housing Expenses (daily) Limitation on Housing Expenses (full year)
Argentina Buenos Aires 120.27 43,900
Australia Canberra 70.68 25,800
Australia Melbourne 72.60 26,500
Australia Perth 109.59 40,000
Austria Vienna 78.97 28,824
Bahamas, The Nassau 136.16 49,700
Bahrain Bahrain 120.55 44,000
Barbados Barbados 103.29 37,700
Belgium Antwerp 98.90 36,100
Belgium Brussels 137.53 50,200
Belgium Gosselies 98.90 36,100
Belgium Hoogbuul 98.90 36,100
Belgium Mons 98.90 36,100
Belgium SHAPE/Chievres 98.90 36,100
Bermuda Bermuda 197.26 72,000
Bosnia-Herzegovina Sarajevo 74.52 27,200
Brazil Brasilia 101.64 37,100
Brazil Rio de Janeiro 96.16 35,100
Brazil Sao Paolo 127.40 46,500
Canada Calgary 109.04 39,800
Canada Dartmouth 92.88 33,900
Canada Edmonton 83.01 30,300
Canada Halifax 92.88 33,900
Canada London/Ontario 79.18 28,900
Canada Montreal 153.97 56,200
Canada Ottawa 118.90 43,400
Canada Toronto 126.03 46,000
Canada Vancouver 122.19 44,600
Canada Victoria 92.33 33,700
Canada Winnipeg 80.00 29,200
Chile Santiago 96.71 35,300
China Beijing 134.62 49,137
China Hong Kong 313.15 114,300
China Shanghai 156.17 57,001
Colombia Bogota 148.22 54,100
Colombia All cities other than Bogota and Barranquilla 123.01 44,900
Costa Rica San Jose 71.78 26,200
Dominican Republic Santo Domingo 110.96 40,500
Ecuador Guayaquil 84.38 30,800
Ecuador Quito 83.56 30,500
France Garches 238.90 87,200
France Le Havre 105.48 38,500
France Lyon 149.32 54,500
France Marseille 139.73 51,000
France Montpellier 123.84 45,200
France Paris 238.90 87,200
France Sevres 238.90 87,200
France Suresnes 238.90 87,200
France Versailles 238.90 87,200
Germany Babenhausen 116.97 42,700
Germany Bad Aibling 99.73 36,400
Germany Bad Nauheim 93.42 34,100
Germany Baumholder 106.58 38,900
Germany Berlin 143.29 52,300
Germany Birkenfeld 106.58 38,900
Germany Boeblingen 127.40 46,500
Germany Butzbach 91.51 33,400
Germany Darmstadt 116.99 42,700
Germany Erlangen 74.25 27,100
Germany Frankfurt am Main 122.19 44,600
Germany Friedberg 93.42 34,100
Germany Fuerth 74.25 27,100
Germany Garmisch-Partenkirchen 101.10 36,900
Germany Geilenkirchen 80.27 29,300
Germany Gelnhausen 126.58 46,200
Germany Germersheim 88.77 32,400
Germany Giebelstadt 101.40 37,000
Germany Giessen 91.51 33,400
Germany Grafenwoehr 75.89 27,700
Germany Hanau 126.58 46,200
Germany Hannover 87.40 31,900
Germany Heidelberg 116.71 42,600
Germany Idar-Oberstein 106.58 38,900
Germany Ingolstadt 125.75 45,900
Germany Kaiserslautern, Landkreis 130.41 47,600
Germany Kitzingen 101.40 37,000
Germany Leimen 116.71 42,600
Germany Ludwigsburg 127.40 46,500
Germany Mainz 143.84 52,500
Germany Mannheim 116.71 42,600
Germany Munich 125.75 45,900
Germany Nellingen 127.40 46,500
Germany Neubruecke 106.58 38,900
Germany Nuernberg 74.25 27,100
Germany Ober Ramstadt 116.99 42,700
Germany Oberammergau 101.10 36,900
Germany Pirmasens 130.41 47,600
Germany Rheinau 116.71 42,600
Germany Schwabach 74.25 27,100
Germany Schwetzingen 116.71 42,600
Germany Seckenheim 116.71 42,600
Germany Sembach 130.41 47,600
Germany Stuttgart 127.40 46,500
Germany Wertheim 101.40 37,000
Germany Wiesbaden 143.84 52,500
Germany Wuerzberg 101.40 37,000
Germany Zirndorf 74.25 27,100
Germany Zweibrueken 130.41 47,600
Germany All cities other than Augsburg, Babenhausen, Bad Aibling, Bad Kreuznach, Bad Nauheim, Baumholder, Berchtesgaden, Berlin, Birkenfeld, Boeblingen, Bonn, Bremen, Bremerhaven, Butzbach, Cologne, Darmstadt, Delmenhorst, Duesseldorf, Erlangen, Flensburg, Frankfurt am Main, Friedberg, Fuerth, Garlstedt, Garmisch-Partenkirchen, Geilenkirchen, Gelnhausen, Germersheim, Giebelstadt, Giessen, Grafenwoehr, Grefrath, Greven, Gruenstadt, Hamburg, Hanau, Handorf, Hannover, Heidelberg, Heilbronn, Herongen, Idar-Oberstein, Ingolstadt, Kaiserslautern, Landkreis, Kalkar, Karlsruhe, Kerpen, Kitzingen, Koblenz, Leimen, Leipzig, Ludwigsburg, Mainz, Mannheim, Moenchen-Gladbach, Muenster, Munich, Nellingen, Neubruecke, Noervenich, Nuernberg, Ober Ramstadt, Oberammergau, Osterholz-Scharmbeck, Pirmasens, Rheinau, Rheinberg, Schwabach, Schwetzingen, Seckenheim, Sembach, Stuttgart, Twisteden, Wahn, Wertheim, Wiesbaden, Worms, Wuerzburg, Zirndorf and Zweibrueken. 103.29 37,700
Greece Athens 94.25 34,400
Greece Argyroupolis 91.23 33,300
Greece Elefsis 94.25 34,400
Greece Ellinikon 94.25 34,400
Greece Mt. Hortiatis 91.23 33,300
Greece Mt. Parnis 94.25 34,400
Greece Mt. Pateras 94.25 34,400
Greece Nea Makri 94.25 34,400
Greece Perivolaki 91.23 33,300
Greece Piraeus 94.25 34,400
Greece Souda Bay (Crete) 72.88 26,600
Greece Tanagra 94.25 34,400
Greece Thessaloniki 91.23 33,300
Guatemala Guatemala City 103.01 37,600
Holy See, The Holy See, The 159.18 58,100
Hungary Budapest 89.04 32,500
India Mumbai 156.19 57,011
India New Delhi 73.75 26,920
Indonesia Jakarta 103.49 37,776
Ireland Dublin 80.55 29,400
Ireland Limerick 80.00 29,200
Ireland Shannon Area 80.00 29,200
Italy Catania 78.63 28,700
Italy Genoa 103.29 37,700
Italy Gioia Tauro 85.48 31,200
Italy La Spezia 103.29 37,700
Italy Leghorn 99.45 36,300
Italy Milan 237.53 86,700
Italy Naples 131.23 47,900
Italy Pisa 99.45 36,300
Italy Pordenone-Aviano 109.59 40,000
Italy Rome 159.18 58,100
Italy Sardinia 81.37 29,700
Italy Sigonella 78.63 28,700
Italy Turin 118.63 43,300
Italy Verona 75.89 27,700
Italy Vicenza 110.68 40,400
Italy All cities other than Avellino, Brindisi, Catania, Florence, Gaeta, Genoa, Gioia Tauro, La Spezia, Leghorn, Milan, Mount Vergine, Naples, Nettuno, Pisa, Pordenone-Aviano, Rome, Sardinia, Sigonella, Turin, Verona and Vicenza. 91.23 33,300
Jamaica Kingston 112.88 41,200
Japan Akashi 73.70 26,900
Japan Atsugi 93.15 34,000
Japan Camp Zama 93.15 34,000
Japan Chiba-Ken 93.15 34,000
Japan Fussa 93.15 34,000
Japan Gifu 80.00 29,200
Japan Gotemba 75.07 27,400
Japan Haneda 93.15 34,000
Japan Kanagawa-Ken 93.15 34,000
Japan Komaki 80.00 29,200
Japan Machida-Shi 93.15 34,000
Japan Nagoya 103.52 37,786
Japan Okinawa Prefecture 123.56 45,100
Japan Osaka-Kobe 145.30 53,036
Japan Sagamihara 93.15 34,000
Japan Saitama-Ken 93.15 34,000
Japan Sasebo 73.70 26,900
Japan Tachikawa 93.15 34,000
Japan Tokyo 234.79 85,700
Japan Tokyo-to 99.73 36,400
Japan Yokohama 131.23 47,900
Japan Yokosuka 113.42 41,400
Japan Yokota 93.15 34,000
Korea Camp Carroll 77.53 28,300
Korea Camps Market 179.18 65,400
Korea Chinhae 83.01 30,300
Korea Chunchon 76.99 28,100
Korea Colbern 179.18 65,400
Korea K-16 179.18 65,400
Korea Kimhae 86.03 31,400
Korea Kimpo Airfield 179.18 65,400
Korea Kwangju 82.19 30,000
Korea Mercer 179.18 65,400
Korea Munsan 75.62 27,600
Korea Osan AB 93.42 34,100
Korea Pusan 86.03 31,400
Korea Pyongtaek 93.42 34,100
Korea Seoul 179.18 65,400
Korea Suwon 179.18 65,400
Korea Taegu 97.53 35,600
Korea Tongduchon 75.62 27,600
Korea Uijongbu 106.85 39,000
Korea Waegwan 77.53 28,300
Korea All cities other than Ammo Depot #9, Camp Carroll, Camps Market, Changwon, Chinhae, Chunchon, Colbern, K-16, Kimhae, Kimpo Airfield, Kunsun, Kwangju, Mercer, Munsan, Osan AB, Pusan, Pyongtaek, Seoul, Suwon, Taegu, Tongduchon, Uijongbu, and Waegwan. 87.40 31,900
Kuwait Kuwait City 166.85 60,900
Kuwait All cities other than Kuwait City 149.59 54,600
Luxembourg Luxembourg 130.68 47,700
Macedonia Skopje 96.99 35,400
Malaysia Kuala Lumpur 131.50 48,000
Malaysia All cities other than Kuala Lumpur 92.33 33,700
Malta Malta 108.22 39,500
Mexico Hermosillo 91.23 33,300
Mexico Mazatlan 81.92 29,900
Mexico Mexico City 116.16 42,400
Mexico Monterrey 108.49 39,600
Mexico All cities other than Ciudad Juarez, Cuernavaca, Guadalajara, Hermosillo, Matamoros, Mazatlan, Merida, Metapa, Mexico City, Monterrey, Nogales, Nuevo Laredo, Tapachula, Tijuana, Tuxtla Gutierrez, Veracruz. 103.84 37,900
Netherlands Amsterdam 144.93 52,900
Netherlands Aruba 98.63 36,000
Netherlands Brunssum 90.14 32,900
Netherlands Eygelshoven 90.14 32,900
Netherlands Hague, The 163.29 59,600
Netherlands Heerlen 90.14 32,900
Netherlands Hoensbroek 90.14 32,900
Netherlands Hulsberg 90.14 32,900
Netherlands Kerkrade 90.14 32,900
Netherlands Landgraaf 90.14 32,900
Netherlands Maastricht 90.14 32,900
Netherlands Papendrecht 114.52 41,800
Netherlands Rotterdam 114.52 41,800
Netherlands Schaesburg 90.14 32,900
Netherlands Schinnen 90.14 32,900
Netherlands Schiphol 144.93 52,900
Netherlands Ypenburg 163.29 59,600
Netherlands All cities other than Amsterdam, Aruba, Brunssum, Coevorden, Eygelshoven, The Hague, Heerlen, Hoensbroek, Hulsberg, Kerkrade, Landgraaf, Maastricht, Margraten, Papendrecht, Rotterdam, Schaesburg, Schinnen, Schiphol, and Ypenburg. 83.29 30,400
New Zealand Auckland 97.81 35,700
New Zealand Wellington 92.60 33,800
Nicaragua Managua 87.12 31,800
Norway Oslo 83.76 30,573
Norway Stavanger 96.44 35,200
Norway All cities other than Oslo and Stavanger. 98.08 35,800
Panama Panama City 88.22 32,200
Peru Lima 74.79 27,300
Philippines Cavite 98.63 36,000
Philippines Manila 98.63 36,000
Poland Poland 72.33 26,400
Portugal Alverca 145.48 53,100
Portugal Lajes Field 71.78 26,200
Portugal Lisbon 145.48 53,100
Qatar Doha 95.30 34,786
Russia Moscow 249.04 90,900
Russia Saint Petersburg 113.70 41,500
Russia Sakhalin Island 212.33 77,500
Russia Vladivostok 212.33 77,500
Russia Yekaterinburg 129.86 47,400
Rwanda Kigali 86.30 31,500
Saudi Arabia Jeddah 84.02 30,667
Saudi Arabia Riyadh 84.02 30,667
Singapore Singapore 155.34 56,700
South Africa Pretoria 110.14 40,200
Spain Barcelona 108.49 39,600
Spain Madrid 107.67 39,300
Spain Rota 92.60 33,800
Spain Valencia 111.51 40,700
Switzerland Bern 139.45 50,900
Switzerland Geneva 194.25 70,900
Switzerland Zurich 107.45 39,219
Switzerland All cities other than Bern, Geneva and Zurich. 90.14 32,900
Taiwan Taipei 122.42 44,685
Thailand Bangkok 100.27 36,600
Turkey Ankara 89.04 32,500
Turkey Elmadag 89.04 32,500
Turkey Izmir-Cigli 86.58 31,600
Turkey Manzarali 89.04 32,500
Turkey Yamanlar 86.58 31,600
Ukraine Kiev 89.98 32,844
United Arab Emirates Abu Dhabi 84.07 30,687
United Arab Emirates Dubai 116.31 42,452
United Kingdom Basingstoke 112.60 41,099
United Kingdom Bath 112.33 41,000
United Kingdom Bracknell 170.14 62,100
United Kingdom Bristol 106.03 38,700
United Kingdom Cambridge 117.81 43,000
United Kingdom Caversham 202.19 73,800
United Kingdom Cheltenham 128.22 46,800
United Kingdon Chicksands 72.60 26,500
United Kingdom Croughton 105.75 38,600
United Kingdom Fairford 108.77 39,700
United Kingdom Farnborough 141.92 51,800
United Kingdom Felixstowe 123.29 45,000
United Kingdom Gibraltar 122.24 44,616
United Kingdom Harrogate 119.18 43,500
United Kingdom High Wycombe 170.14 62,100
United Kingdom Kemble 108.77 39,700
United Kingdom Lakenheath 150.96 55,100
United Kingdom Liverpool 106.30 38,800
United Kingdom London 213.15 77,800
United Kingdom Loudwater 143.84 52,500
United Kingdom Menwith Hill 119.18 43,500
United Kingdom Mildenhall 150.96 55,100
United Kingdom Oxfordshire 105.75 38,600
United Kingdom Plymouth 105.75 38,600
United Kingdom Portsmouth 105.75 38,600
United Kingdom Reading 170.14 62,100
United Kingdom Rochester 109.32 39,900
United Kingdom Southampton 121.10 44,200
United Kingdom Surrey 132.61 48,402
United Kingdom Waterbeach 120.27 43,900
United Kingdon West Byfleet 72.33 26,400
United Kingdom Wiltshire 113.97 41,600
United Kingdom All cities other than Basingstoke, Bath, Belfast, Birmingham Bracknell, Bristol, Brough, Bude, Cambridge, Caversham, Chelmsford, Cheltenham, Chicksands, Croughton, Dunstable, Edinburgh, Edzell, Fairford, Farnborough, Felixstowe, Ft. Halstead, Glenrothes, Greenham Common, Harrogate, High Wycombe, Hythe, Kemble, Lakenheath, Liverpool, London, Loudwater, Menwith Hill, Mildenhall, Nottingham, Oxfordshire, Plymouth, Portsmouth, Reading, Rochester, Southampton, Surrey, Waterbeach, Welford, West Byfleet, and Wiltshire. 104.93 38,300
Venezuela Caracas 156.16 57,000
Vietnam Hanoi 128.22 46,800

EFFECTIVE DATE

This notice is effective for taxable years beginning on or after January 1, 2007.

DRAFTING INFORMATION

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).


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