Low Income Housing Tax Credit Compliance

• Report this change to AHC and complete the Notification of Change in Owner/Management Contact Information. This form is used only to convey change of contact information. If there is an ownership change (i.e. sale of property), please contact AHC for additional information.
• Review the LURA (Land Use Restrictions Agreement) to become familiar with the LIHTC requirements of the property.
• Prepare a management plan that incorporates LIHTC compliance policies and procedures, and required documents and forms.
• If staff involved with applicant intake, leasing, property management and reporting are not already familiar with LIHTC requirements, sign up for training to avoid noncompliance.

Under the LIHTC program, a tenant’s annual income is calculated according to the method used to determine gross annual income for HUD’s Section 8 Program. This method differs from the way a household’s income is calculated for tax purposes. Owners/managers should refer to HUD Handbook 4350.3: Occupancy Requirements of Subsidized Multifamily Housing Programs, focusing on Chapters 3 and 5. As always, contact AHC for additional guidance and training opportunities.

A LIHTC unit is a unit that is occupied by an income eligible household with a compliant gross rent and meets the student status requirements. An income eligible household is one whose annual income is at or below the established income limit for that household size. Compliant gross rent is the tenant paid rent, plus an allowance for utilities and any non-optional charges that is at or below the established rent for the unit size.

A qualifying household must contain at least one household member who is not a full-time student, unless the household meets an exception as determined under Section 42 code. A qualifying unit must also meet the National Standards for the Physical Inspection of Real Estate (NSPIRE). In addition to income and rent compliance, the lease and any lease addenda must be executed and compliant with the LIHTC program.

Owners/managers are required to anticipate the amount of income a household will receive during the coming 12-month period. Generally, this amount is calculated by estimating the family’s annual income using current income and assets. However, if changes from current circumstances can be verified (e.g., an approved raise, an expected bonus, a change in the number of overtime hours to be worked) these should also be considered in anticipating annual income.

Under LIHTC, there is no limitation on the amount of assets an eligible household can own. But, anticipated income from assets must be included in the calculation of annual income. Section 8 program rules specify the types of assets to be considered. 

Third-party written verifications, or Verification of Employment (VOE) are preferred. A VOE is one that is sent directly to the employer, with the written release (approval) of the employee (your applicant/tenant). If a VOE is not possible, then first-hand documentation such as paystubs, are acceptable. However, in cases where either of these methods are not feasible, telephone verifications may be used as long as management staff complete, sign, and date a form that identifies the third party oral source. In some instances, an applicant/tenant can self-certify. If third-party verification is not available, owners must document the tenant file to explain why third-party verification was not available. If uncertain, call AHC!