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A household can consist of one or more persons. A household may report to you that one of its members will be absent from the unit. For instance, an applicant may report that she has a daughter who’s away at school. Or an applicant may report that his wife recently had a stroke and will be confined to a nursing home. When certifying these households, you need to know whether to count these absent household members for purposes of determining unit size and household income.
During the certification or recertification process, residents are required to report all income from all sources to the owner or manager during certification or recertification. One component of annual income is any income the household’s assets generate. And sometimes, households may dispose of assets for less than fair market value (FMV). These can include cash gifts or property. As an owner or manager, you must get correct information from residents about assets disposed of for less than FMV.
On March 6, HUD released the 2015 income limits, available at huduser.org. According to Revenue Ruling 94-57, you have 45 days to begin using them to certify and recertify low-income households at your tax credit site. This means this year’s income limits must be implemented no later than April 19, 2015. Here are some site management issues affected by changes in income limits.
The IRS recently issued the 2015 optional standard mileage rates. Starting Jan. 1, 2015, when calculating the deductible costs of operating an automobile, the new rates will be 57.5 cents per mile for business miles driven, 23 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations.
On Oct. 31, 2014, HUD issued Housing Notice 2014-15, “Passbook Savings Rate Effective February 1, 2015 and Establishing Future Passbook Savings Rates.” The HUD passbook rate is used to impute asset income on households who have $5,000 or more in assets. Currently, the HUD passbook rate is 2 percent. Effective Feb. 1, 2015, the HUD passbook rate will be reduced to 0.06 percent. Since the LIHTC program is required to follow Section 8 rules regarding household income calculation, you must use the new rate beginning Feb. 1, 2015.
When certifying or recertifying households at your tax credit site, it’s not uncommon to discover that a household member is the creator or beneficiary of a trust. If so, you’ll need to account for the trust when calculating the household’s income. If you don’t know how to treat trusts, you’ll make mistakes when trying to determine a household’s eligibility to occupy a low-income unit.
On Dec. 4, HUD released income limits for 2013, but revised the limits after discovering a calculation error. The revised numbers were issued Dec. 11. Under the Housing and Economic Recovery Act of 2008 (HERA), income limits are used to determine qualification levels as well as set maximum rental rates for projects funded with low-income housing tax credits and projects financed with tax-exempt housing bonds. These projects are referred to by HUD as Multifamily Tax Subsidy Projects (MTSPs) and are calculated and presented separately from the Section 8 income limits.
Annual income is an important factor that influences the eligibility of an applicant for the tax credit program. To become income eligible, an applicant's household gross annual income must be equal to or less than the income limit applicable to your site.
Wages and salaries. The full amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses, and other compensation for personal services.
Net income from operation of a business or profession. Any withdrawal of cash or assets from the operation of a business or profession will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the family.
On Dec. 1, HUD released income limits for 2012. Under the Housing and Economic Recovery Act of 2008 (HERA), income limits are used to determine qualification levels as well as set maximum rental rates for projects funded with low-income housing tax credits and projects financed with tax-exempt housing bonds. These projects are referred to by HUD as Multifamily Tax Subsidy Projects (MTSPs) and are calculated and presented separately from the Section 8 income limits.
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