Notice 2023-26: Housing expense limit adjustments, foreign locations for 2023
Adjustments to limitation on housing expenses, under section 911, for specific locations for 2023
Adjustments to limitation on housing expenses, under section 911, for specific locations
The IRS today released an advance version of Notice 2023-26 [PDF 164 KB] providing the adjustments to the limitation on housing expenses, under section 911, for specific locations for 2023.
The adjustments are made on the basis of geographic differences in housing costs relative to housing costs in the United States—thus, providing an increased amount that a qualified individual can elect to exclude from gross income as a housing cost amount for purposes of section 911.
Under a general limitation, a qualified individual whose entire tax year is within the applicable period is limited to maximum housing expenses of $36,000 ($120,000 x .30) for 2023 to the extent they exceed a base amount of $19,200 ($120,000 x .16). However, the IRS has authority to issue guidance to adjust the $36,000 maximum amount in relation to geographic differences in housing cost amounts relative to housing costs in the United States.
Notice 2023-26 includes a table with the adjusted limitations on housing expenses for certain foreign locations (in lieu of the otherwise applicable limitation of $36,000) for 2023.
If the amount provided is more than the amount that was allowed for 2022, a taxpayer can elect to claim the 2023 limitation in his or her 2022 income tax return. If the 2022 return has already been filed, it can be amended to claim the higher limitation amount.
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