I thought I was so smart. I’d read several articles on Ask Admin (intranet only) on using my lodging per diem during my 11-month long language training towards the mortgage interest, property tax, and condo fees on a new place I’d buy in DC. The answers seemed pretty clear: so long as I was purchasing the home for the express purpose of residing it I could get reimbursed up to the per diem limit [see Arensburger]. So, I was kinda surprised when the voucher folks denied my first voucher which had some $1500 in mortgage-related costs on it. At first, they withheld the whole $7000-odd reimbursement, saying that charges on a HUD-1 couldn’t be paid out of per diem funds. After taking it up the chain, they funded all but the $1500 that was on the HUD-1. I appealed to the Civilian Board of Contract Appeals. After five months, the judge ruled on my side – you can see all the details here.

The two lessons: 1.) In payroll issues, there’s an administrative appeal to decisions that don’t jibe with the regs; and 2.) buying a house on per diem can save you a good deal of cash. Even though it’s on the sliding scale, I’ve saved over $6,000 in interest payments and my furniture rental and utilities were included while I was still above 25%. I’m not sure on the tax liability yet, but it looks like the interest payments are also available as Schedule A deductions. Huzzah!