Internal Revenue Bulletin:  2016-12 

March 21, 2016 

Notice 2016–21

Determination of Housing Cost Amounts Eligible for Exclusion or Deduction for 2016


SECTION 1. PURPOSE

This notice provides adjustments to the limitation on housing expenses for purposes of section 911 of the Internal Revenue Code for specific locations for 2016. 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) 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 ($276.78 per day for 2016, or $101,300 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 2016 is $16,208 ($101,300 x .16).

Section 911(c)(2)(A) 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 $30,390 ($101,300 x .30) in 2016.

Section 911(c)(2)(B) 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, 2006–2 C.B. 766, and Notice 2007–25, 2007–1 C.B. 760, for 2006; Notice 2007–77, 2007–2 C.B. 735, for 2007; Notice 2008–107, 2008–2 C.B. 1266, for 2008 and 2009; Notice 2010–27, 2010–15 I.R.B. 531, for 2009 and 2010; Notice 2011–8, 2011–8 I.R.B. 503, for 2010 and 2011; Notice 2012–19, 2012–10 I.R.B. 440 for 2011 and 2012; Notice 2013–31, 2013–21 I.R.B. 1099, for 2012 and 2013; Notice 2014–29, 2014–18 I.R.B. 991 for 2013 and 2014; and Notice 2015–33, 2015–18 I.R.B. 934 for 2014 and 2015 to provide adjustments to the limitation on housing expenses 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 2016

The following table provides adjusted limitations on housing expenses (in lieu of the otherwise applicable limitation of $30,390) for 2016.

Country Location Limitation on Housing Expenses (full year) Limitation on Housing Expenses (daily)
Angola Luanda 84,000 229.51
Argentina Buenos Aires 56,500 154.37
Australia Melbourne 30,500 83.33
Australia Perth 32,600 89.07
Australia Sydney 61,400 167.76
Austria Vienna 35,400 96.72
Bahamas, The Grand Bahama Island 30,900 84.43
Bahamas, The Nassau 49,700 135.79
Bahrain Bahrain 44,000 120.22
Barbados Barbados 37,700 103.01
Belgium Brussels 40,000 109.29
Belgium Gosselies 34,900 95.36
Belgium Mons 34,900 95.36
Belgium SHAPE/Chievres 34,900 95.36
Bermuda Bermuda 90,000 245.90
Brazil Rio de Janeiro 35,100 95.90
Brazil Sao Paulo 56,600 154.64
Canada Calgary 36,800 100.55
Canada Montreal 43,900 119.95
Canada Ottawa 41,300 112.84
Canada Quebec 33,300 90.98
Canada Toronto 41,400 113.11
Canada Vancouver 40,200 109.84
Cayman Islands Grand Cayman 48,000 131.15
Chile Santiago 37,500 102.46
China Beijing 71,200 194.54
China Hong Kong 114,300 312.30
China Shanghai 57,001 155.74
Colombia Bogota 58,700 160.38
Colombia All cities other than Bogota 49,400 134.97
Costa Rica San Jose 32,000 87.43
Democratic Republic of the Congo Kinshasa 42,000 114.75
Denmark Copenhagen 43,704 119.41
Dominican Republic Santo Domingo 45,500 124.32
Ecuador Guayaquil 30,800 84.15
Ecuador Quito 38,200 104.37
El Salvador San Salvador 32,000 87.43
Estonia Tallinn 46,600 127.32
France Garches 68,600 187.43
France Lyon 38,000 103.83
France Marseille 37,000 101.09
France Montpellier 30,600 83.61
France Paris 68,600 187.43
France Sevres 68,600 187.43
France Suresnes 68,600 187.43
France Versailles 68,600 187.43
France All cities other than Garches, Le Havre, Lyon, Marseille, Paris, Sevres, Suresnes and Versailles 31,900 87.16
Germany Babenhausen 33,700 92.08
Germany Baumholder 32,600 89.07
Germany Berlin 41,100 112.30
Germany Birkenfeld 32,600 89.07
Germany Boeblingen 40,800 111.48
Germany Bonn 42,000 114.75
Germany Butzbach 30,390 83.03
Germany Cologne 56,200 153.55
Germany Darmstadt 33,700 92.08
Germany Frankfurt am Main 35,100 95.90
Germany Garmisch-Partenkirchen 31,600 86.34
Germany Gelnhausen 42,400 115.85
Germany Giessen 36,000 98.36
Germany Grafenwoehr 34,000 92.90
Germany Hanau 42,400 115.85
Germany Heidelberg 31,400 85.79
Germany Idar-Oberstein 32,600 89.07
Germany Ingolstadt 48,100 131.42
Germany Kaiserslautern, Landkreis 41,200 112.57
Germany Karlsruhe 32,400 88.52
Germany Koblenz 33,000 90.16
Germany Leimen 31,400 85.79
Germany Ludwigsburg 40,800 111.48
Germany Mainz 44,800 122.40
Germany Mannheim 31,400 85.79
Germany Munich 48,100 131.42
Germany Nellingen 40,800 111.48
Germany Neubruecke 32,600 89.07
Germany Ober Ramstadt 33,700 92.08
Germany Oberammergau 31,600 86.34
Germany Pfullendorf 33,000 90.16
Germany Pirmasens 41,200 112.57
Germany Rheinau 31,400 85.79
Germany Schwetzingen 31,400 85.79
Germany Seckenheim 31,400 85.79
Germany Sembach 41,200 112.57
Germany Stuttgart 40,800 111.48
Germany Vilseck 34,000 92.90
Germany Wahn 42,000 114.75
Germany Wiesbaden 44,800 122.40
Germany Zweibrueken 41,200 112.57
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, 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, Mayen, Moenchen-Gladbach, Muenster, Munich, Nellingen, Neubruecke, Noervenich, Nuernberg, Ober Ramstadt, Oberammergau, Osterholz-Scharmbeck, Pirmasens, Rheinau, Rheinberg, Schwabach, Schwetzingen, Seckenheim, Sembach, Stuttgart, Twisteden, Vilseck, Wahn, Wertheim, Wiesbaden, Worms, Wuerzburg, Zirndorf and Zweibrueken 33,000 90.16
Ghana Accra 36,000 98.36
Greece Athens 33,600 91.80
Greece Elefsis 33,600 91.80
Greece Ellinikon 33,600 91.80
Greece Mt. Parnis 33,600 91.80
Greece Mt. Pateras 33,600 91.80
Greece Nea Makri 33,600 91.80
Greece Piraeus 33,600 91.80
Greece Tanagra 33,600 91.80
Guatemala Guatemala City 41,800 114.21
Guinea Conakry 51,300 140.16
Guyana Georgetown 35,000 95.63
Holy See, The Holy See, The 45,700 124.86
Hungary Budapest 32,500 88.80
Hungary Papá 44,500 121.58
India Mumbai 67,920 185.57
India New Delhi 56,124 153.34
Indonesia Jakarta 37,776 103.21
Ireland Dublin 39,700 108.47
Ireland Shannon Area 31,400 85.79
Israel Tel Aviv 50,800 138.80
Italy Genoa 41,800 114.21
Italy Gioia Tauro 31,200 85.25
Italy La Spezia 40,400 110.38
Italy Milan 68,300 186.61
Italy Naples 43,400 118.58
Italy Parma 34,700 94.81
Italy Pordenone-Aviano 39,600 108.20
Italy Rome 52,100 142.35
Italy Turin 34,200 93.44
Italy Vicenza 35,900 98.09
Jamaica Kingston 41,200 112.57
Japan Atsugi 36,300 99.18
Japan Camp Zama 36,300 99.18
Japan Chiba-Ken 36,300 99.18
Japan Fussa 36,300 99.18
Japan Gifu 74,300 203.01
Japan Haneda 36,300 99.18
Japan Kanagawa-Ken 36,300 99.18
Japan Komaki 74,300 203.01
Japan Machidi-Shi 36,300 99.18
Japan Nagoya 74,300 203.01
Japan Okinawa Prefecture 50,400 137.70
Japan Osaka-Kobe 90,664 247.72
Japan Sagamihara 36,300 99.18
Japan Saitama-Ken 36,300 99.18
Japan Sasebo 30,400 83.06
Japan Tachikawa 36,300 99.18
Japan Tokyo 81,300 222.13
Japan Tokyo-to 36,300 99.18
Japan Yokohama 44,600 121.86
Japan Yokosuka 41,700 113.93
Japan Yokota 34,600 94.54
Kazakhstan Almaty 48,000 131.15
Korea Camp Colbern 54,200 148.09
Korea Camp Market 54,200 148.09
Korea Camp Mercer 54,200 148.09
Korea K–16 54,200 148.09
Korea Kimpo Airfield 54,200 148.09
Korea Munsan 31,300 85.52
Korea Osan AB 33,800 92.35
Korea Pyongtaek 38,500 105.19
Korea Seoul 54,200 148.09
Korea Suwon 54,200 148.09
Korea Taegu 31,400 85.79
Korea Tongduchon 35,200 96.17
Kuwait Kuwait City 64,400 175.96
Kuwait All cities other than Kuwait City 57,700 157.65
Luxembourg Luxembourg 37,400 102.19
Macedonia Skopje 35,400 96.72
Malaysia Kuala Lumpur 46,200 126.23
Malaysia All cities other than Kuala Lumpur 33,700 92.08
Malta Malta 55,100 150.55
Mexico Mazatlan 31,000 84.70
Mexico Merida 37,900 103.55
Mexico Mexico City 47,900 130.87
Mexico Monterrey 33,200 90.71
Mexico All cities other than Ciudad Juarez, Cuernavaca, Guadalajara, Hermosillo, Matamoros, Mazatlan, Merida, Metapa, Mexico City, Monterrey, Nogales, Nuevo Laredo, Reynosa, Tapachula, Tijuana, Tuxtla Gutierrez, and Veracruz 39,400 107.65
Mozambique Maputo 39,500 107.92
Namibia Windhoek 32,100 87.70
Netherlands Amsterdam 52,900 144.54
Netherlands Aruba 36,000 98.36
Netherlands Brunssum 32,700 89.34
Netherlands Eygelshoven 32,700 89.34
Netherlands Hague, The 62,200 169.95
Netherlands Heerlen 32,700 89.34
Netherlands Hoensbroek 32,700 89.34
Netherlands Hulsberg 32,700 89.34
Netherlands Kerkrade 32,700 89.34
Netherlands Landgraaf 32,700 89.34
Netherlands Maastricht 32,700 89.34
Netherlands Papendrecht 32,800 89.62
Netherlands Rotterdam 32,800 89.62
Netherlands Schaesburg 32,700 89.34
Netherlands Schinnen 32,700 89.34
Netherlands Schiphol 52,900 144.54
Netherlands Ypenburg 54,500 148.91
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. 32,400 88.52
Netherlands Antilles Curacao 45,800 125.14
New Zealand Auckland 35,700 97.54
New Zealand Christchurch 32,100 87.70
New Zealand Wellington 33,800 92.35
Nicaragua Managua 31,800 86.89
Nigeria Abuja 36,000 98.36
Norway Oslo 34,400 93.99
Oman Muscat 41,300 112.84
Panama Panama City 35,500 96.99
Paraguay Asuncion 31,100 84.97
Peru Lima 39,100 106.83
Philippines Cavite 35,700 97.54
Philippines Manila 35,700 97.54
Portugal Alverca 41,800 114.21
Portugal Lisbon 41,800 114.21
Qatar Doha 42,744 116.79
Qatar All cities other than Doha 32,400 88.52
Russia Moscow 108,000 295.08
Russia Saint Petersburg 60,000 163.93
Russia Sakhalin Island 77,500 211.75
Russia Vladivostok 77,500 211.75
Russia Yekaterinburg 47,400 129.51
Rwanda Kigali 31,500 86.07
Saudi Arabia Jeddah 30,667 83.79
Saudi Arabia Riyadh 40,000 109.29
Singapore Singapore 77,100 210.66
Slovenia Ljubljana 48,000 131.15
South Africa Pretoria 39,300 107.38
Spain Barcelona 40,600 110.93
Spain Madrid 55,700 152.19
Spain Rota 34,000 92.90
Spain Valencia 32,000 87.43
Suriname Paramaribo 33,000 90.16
Switzerland Bern 64,900 177.32
Switzerland Geneva 93,300 254.92
Switzerland Zurich 39,219 107.16
Switzerland All cities other than Bern, Geneva and Zurich 32,900 89.89
Taiwan Taipei 46,188 126.20
Tanzania Dar Es Salaam 44,000 120.22
Thailand Bangkok 59,000 161.20
Trinidad and Tobago Port of Spain 54,500 148.91
Turkey Izmir-Cigli 31,600 86.34
Turkey Yamanlar 31,600 86.34
Ukraine Kiev 72,000 196.72
United Arab Emirates Abu Dhabi 49,687 135.76
United Arab Emirates Dubai 57,174 156.21
United Kingdom Basingstoke 41,099 112.29
United Kingdom Bath 41,000 112.02
United Kingdom Bracknell 62,100 169.67
United Kingdom Bristol 37,400 102.19
United Kingdom Brookwood 40,900 111.75
United Kingdom Cambridge 40,700 111.20
United Kingdom Caversham 73,800 201.64
United Kingdom Cheltenham 49,600 135.52
United Kingdom Croughton 41,700 113.93
United Kingdom Fairford 40,500 110.66
United Kingdom Farnborough 54,700 149.45
United Kingdom Felixstowe 39,300 107.38
United Kingdom Gibraltar 44,616 121.90
United Kingdom Harrogate 43,900 119.95
United Kingdom High Wycombe 62,100 169.67
United Kingdom Huntingdon 40,900 111.75
United Kingdom Kemble 40,500 110.66
United Kingdom Lakenheath 52,400 143.17
United Kingdom Liverpool 36,800 100.55
United Kingdom London 82,000 224.04
United Kingdom Loudwater 64,600 176.50
United Kingdom Menwith Hill 43,900 119.95
United Kingdom Mildenhall 52,400 143.17
United Kingdom Oxfordshire 41,200 112.57
United Kingdom Plymouth 41,200 112.57
United Kingdom Portsmouth 41,200 112.57
United Kingdom Reading 62,100 169.67
United Kingdom Rochester 42,300 115.57
United Kingdom Samlesbury 40,900 111.75
United Kingdom Southampton 44,200 120.77
United Kingdom Surrey 48,402 132.25
United Kingdom Waterbeach 42,100 115.03
United Kingdom Wiltshire 39,100 106.83
United Kingdom All cities other than Basingstoke, Bath, Belfast, Birmingham, Bracknell, Bristol, Brookwood, Brough, Cambridge, Caversham, Chelmsford, Cheltenham, Chicksands, Croughton, Dunstable, Edinburgh, Edzell, Fairford, Farnborough, Felixstowe, Ft. Halstead, Gibraltar, Glenrothes, Greenham Common, Harrogate, High Wycombe, Huntingdon, Hythe, Kemble, Lakenheath, Liverpool, London, Loudwater, Menwith Hill, Mildenhall, Nottingham, Oxfordshire, Plymouth, Portsmouth, Reading, Rochester, Samlesbury, Southampton, Surrey, Waterbeach, Welford, West Byfleet, and Wiltshire. 40,900 111.75
Venezuela Caracas 57,000 155.74
Vietnam Hanoi 46,800 127.87
Vietnam Ho Chi Minh City 42,000 114.75

SECTION 4. ELECTION TO APPLY 2016 ADJUSTED LIMITATIONS TO 2015 TAXABLE YEAR

For some locations, the limitation on housing expenses provided in section 3 of this notice may be higher than the limitation on housing expenses provided in the “Table of Adjusted Limitations for 2015” in Notice 2015–33. A qualified individual incurring housing expenses in such a location during 2015 may apply the adjusted limitation on housing expenses provided in section 3 of this notice for 2015 in lieu of the amounts provided in the “Table of Adjusted Limitations for 2015” in Notice 2015–33 (and as set forth in the Instructions to Form 2555 (2015)).

The Treasury Department and the IRS anticipate that future annual notices providing adjustments to housing expense limitations will make a similar election available to qualified individuals that incur housing expenses in the immediately preceding year. For example, when adjusted housing expense limitations for 2017 are issued, it is expected that taxpayers will be permitted to apply those adjusted limitations to the 2016 taxable year.

EFFECT ON OTHER DOCUMENTS

This notice supersedes Notice 2006–87, 2006–2 C.B. 766; Notice 2007–25, 2007–1 C.B. 760; Notice 2007–77, 2007–2 C.B. 735; Notice 2008–107, 2008–2 C.B. 1266; Notice 2010–27, 2010–15 I.R.B. 531; Notice 2011–8, 2011–8 I.R.B. 503; Notice 2012–19, 2012–10 I.R.B. 440; Notice 2013–31, 2013–21 I.R.B. 1099; Notice 2014–29, 2014–18 I.R.B. 991; and Notice 2015–33, 2015–18 I.R.B. 934.

EFFECTIVE DATE

This notice is effective for taxable years beginning on or after January 1, 2016. However, as provided in section 4, a taxpayer may elect to apply the 2016 adjusted housing limitations contained in section 3 of this notice to his or her taxable year beginning in 2015.

DRAFTING INFORMATION

The principal author of this notice is Joseph W. Vetting of the Office of Associate Chief Counsel (International). For further information regarding this notice contact Mr. Vetting at (202) 317-4960 (not a toll-free number).


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