Hi and welcome to Just Answer!The computation of the base housing amount (line 32 of Form 2555) is tied to the maximum foreign earned income exclusion. The amount is 16% of the exclusion amount (computed on a daily basis), multiplied by the number of days in your qualifying period that fall within your tax year.For 2012, the maximum foreign earned income exclusion is $95,100 per year; 16% of this amount is $15,216, or $41.57 per day. To figure your base housing amount if you are a calendar-year taxpayer, multiply $41.57 by the number of your qualifying days during 2012.
Now the taxpayer is in Riyadh and family living in another country - does it matter
Secondly the housing deduction is same for every country or does it differ from country to country,
That is a maximum amount of exclusion - regardless in which country the person lives. Actual exclusion is based on actual housing expenses but may not be more than the maximum calculated as per above.
this amount is added to the exclusion amount which in turn becomes the non taxable amount.
Above is related to the base housing amount.The amount of qualified housing expenses eligible for the housing exclusion and housing deduction is limited. The limit is generally 30% of the maximum foreign earned income exclusion (computed on a daily basis), multiplied by the number of days in your qualifying period that fall within your tax year. For 2012, this is generally $77.95 per day ($28,530 per year). However, the limit will vary depending upon the location of your foreign tax home. The limits for high-cost localities are listed in the Instructions for Form 2555 - see page 6 - http://www.irs.gov/pub/irs-pdf/i2555.pdf
If there is no separate listing for your locality - the general limit - $77.95 per day ($28,530 per year) is applied.