What expenses qualify for the housing allowance, and what doesn't?

Qualifying expenses are those directly related to providing your home. Commonly accepted examples include:

• Rent, or mortgage payments (both principal and interest)
• Down payment and closing costs on a home purchase
• Real estate (property) taxes and homeowners association dues
• Homeowners or renters insurance
• Utilities: electricity, gas, water, sewer, trash, basic home phone, internet, and cable
• Repairs, structural maintenance, and home improvements (roof, paint, deck, remodels)
• Furniture and appliances (purchase, repair, and replacement), dishes and cookware
• Decorating items: rugs, curtains, pictures, bedding, towels
• Cleaning supplies, light bulbs, and paint
• Yard care: lawnmower, landscaping, snow removal, tree trimming, pest control

What does NOT qualify:

• Groceries and food
• Maid service or servants (though hiring someone for home or yard maintenance can qualify)
• Personal items: toiletries, clothing, paper products like plates and napkins
• Cell phone service
• Personal gifts

One more limit worth knowing: the exclusion applies to your principal residence. Expenses for a second home, vacation home, or investment property do not qualify; the IRS and courts have limited the exclusion to one home. When in doubt, ask whether the expense directly provides or maintains the home you live in.