1) If none of the taxpayer’s housing amount is considered pay for with employer-provided amounts, such as when all of the taxpayer’s income is from self-employment, he or she can deduct his or her housing amount, subject to certain limits (generally 30% of the maximum foreign earned income exclusion (computed on a daily basis), multiplied by the number of days in the taxpayer’s qualifying period that fall within the tax year. For 2019 this is generally $87.04 per day ($31,770 per year)).
2) Housing expenses include:
•Rent,
•The fair rental value of housing provided in kind by the employer,
•Repairs,
•Utilities (other than telephone charges),
•Real and personal property insurance,
•Nondeductible occupancy taxes,
•Nonrefundable fees for securing a leasehold,
•Rental of furniture and accessories, and
•Residential parking.
Housing expenses do not include:
•Expenses that are lavish or extravagant under the circumstances,
•Deductible interest and taxes (including deductible interest and taxes of a tenant-stockholder in a cooperative housing corporation),
•The cost of buying property, including principal payments on a mortgage,
•The cost of domestic labor (maids, gardeners, etc.),
•Pay television subscriptions,
Improvements and other expenses that increase the value or appreciably prolong the life of property,
•Purchased furniture or accessories, or
•Depreciation or amortization of property or improvements
The insurance is deductible, but paying for the land may not be if you purchased it and are not renting it.
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