Foreign Earned Income and Housing Cost Exclusions Reasonable housing expenses31 Housing expenses eligible for the exclusion include the reasonable expenses paid during the time the employee qualified for the exclusion by or on behalf of the employee and the employee's spouse or dependents living with the employee. Housing expenses include: * Rent * The fair rental value of housing provided in kind by the employer * Utilities (other than telephone charges) * Household repairs * Real and personal property insurance * Nondeductible occupancy taxes * Nonrefundable fees paid for securing a lease * Rental of furniture and accessories * Residential parking costs Housing expenses that are not considered reasonable and thus are not eligible for the exclusion include: * Expenses that are lavish or extravagant under the circumstances * Deductible interest and taxes * The cost of buying property, including principal payments on a mortgage * Telephone and cable television charges (this probably includes internet charges as well) * Improvements and other expenses that increase the value or appreciably prolong the life of property * Purchased furniture or accessories * Depreciation or amortization of property or improvements * The cost of domestic labor (e.g., housekeepers or gardeners) 31. IRC §911(c)(3); IRS Reg. §1.911-4(b). 6-15