Source: https://intltax.typepad.com/intltax_blog/2011/02/code-911-housing-cost-amounts-updated-2011.html
Timestamp: 2019-04-26 16:13:41+00:00

Document:
Notice 2011-8 provides adjustments to the limitation on housing expenses for purposes of Code § 911 for specific locations for 2011. These adjustments are made on the basis of geographic differences in housing costs relative to housing costs in the United States.
Code § 911(a) allows a qualified individual to elect to exclude from gross income the foreign earned income and housing cost amount of such individual. Code § 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 Code § 911(c)(2), over (B) 16 percent of the exclusion amount (computed on a daily basis) in effect under Code § 911(b)(2)(D) for the calendar year in which such taxable year begins ($254.52 per day for 2011, or $92,900 for the full year), multiplied by the number of days of that taxable year within the applicable period described in Code § 911(d)(1).
The applicable period is the period during which the individual meets the tax home requirement of Code § 911(d)(1) and either the bona fide residence requirement of Code § 911(d)(1)(A) or the physical presence requirement of Code § 911(d)(1)(B). Assuming that the entire taxable year of a qualified individual is within the applicable period, the Code § 911(c)(1)(B) amount for 2011 is $14,864 ($92,900 x .16).
Code § 911(c)(2)(A) limits the housing expenses taken into account in Code § 911(c)(1)(A) to an amount equal to (i) 30 percent (adjusted as may be provided under the Secretary’s authority under Code § 911(c)(2)(B)) of the amount in effect under Code § 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 Code § 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 $27,870 ($92,900 x .30) in 2011. Code § 911(c)(2)(B) authorizes the Secretary to issue regulations or other guidance to adjust the percentage under Code § 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, and Notice 2010-27, for 2009 and 2010 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.
Notice 2011-8 includes a lengthy table with adjusted limitations on housing expenses (in lieu of the otherwise applicable limitation of $27,870) for various locations in 2011.

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