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Tax Credit Housing FAQ

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The federal low-income housing tax credit program has been successful since 1987 in providing low-income tenants with decent apartments at an affordable rent. If you're looking for an apartment at a tax credit property, there are certain things you should know before you apply.

Here are answers to commonly asked questions about the federal low-income housing tax credit program. Do you have a question that isn't addressed here? Please ask.

Q: What's the tax credit program?
A: The tax credit program, also known as the "federal low-income housing tax credit program" or simply LIHTC, is a popular affordable housing program... Read more

Q: Do I get to claim a tax credit?
A: No. The tax credit program gets its name because owners of participating properties receive valuable tax credits in return for keeping their buildings affordable. As a tenant... Read more

Q: Are annuities counted as part of household income?
A: If you have a retirement or other annuity, there's a good chance it will need to be counted in some way as part of your household income. How a landlord should determine how to treat an annuity that you have (or that you may set up after you sign a lease for a low-income apartment at a tax credit property) depends on whether you have the right to withdraw the balance of the annuity and if you are already receiving payments... Read more

Q: Are trusts counted as part of household income?
A: Trusts are often counted in some way as part of household income. How a landlord should determine how to treat a trust that you have (or that you may set up after you sign a lease for a low-income apartment at a tax credit property) depends on whether you have access to the principal in the account or the income from the... Read more

Q: Are assets counted as income?
A: No. Assets themselves aren't counted as income, however any income that an asset produces is normally counted when determining the income-eligibility of a household... Read more

Q: What types of income are included in household income?
A: The U.S. Department of Housing and Urban Development (HUD) requires landlords generally to include income in determining household eligibility for low-income apartments at tax credit properties... Read more

Q: What types of income are excluded from household income?
A: As a general rule, landlords must include income in determining household eligibility for low-income apartments at tax credit properties. However, there are certain items that the U.S. Department of Housing and Urban Development (HUD) requires to be specifically excluded from income calculations... Read more

Q: Do landlords verify income?
A: Yes. If you're considering applying for a low-income apartment at a tax credit property, expect that the landlord or property manager will need verification of income and assets. The tax credit program specifically requires verification, given how much is at stake... Read more

Q: How exactly is my rent calculated?
A: The maximum rent you can be required to pay for a low-income unit in a tax credit property is 30% of a percentage... Read more

Q: Does the number of people in my household affect eligibility?
A: Yes. The number of people in your household affects whether you can qualify for a low-income unit at a tax credit property... Read more

Q: Will I need to sign a special lease?
A: No. The tax credit program doesn't require landlords to have tenants sign a special lease... Read more

Q: Can I rent on a month-to-month basis?
A: When you first sign the lease for an apartment at a tax credit property, it must be for a term of at least... Read more

Q: Will there be market-rate tenants in the building?
A: There may be. Many tax credit buildings include... Read more

Q: If there are market-rate tenants, will I stand out as low-income?
A: You shouldn't. Landlords are required not to segregate market-rate... Read more

Q: Is my income determined based on what I've made in the past year?
A: No. It's determined by looking forward and "annualizing" your income for the next year. For example... Read more

Q: How do landlords count irregular employment income?
A: Employment income must be included as part of household income, whether the income is steady or irregular. Normally, landlords who participate in the tax credit program must use a tenant's current... Read more

Q: Will a divorce settlement or joint assets disqualify me?
A: No. A prospective tenant isn't disqualified simply for having a divorce settlement or joint assets. When you apply for a low-income unit at a tax credit property, the management company... Read more

Q: Is the rent based on my income?
A: No. Unlike other housing programs, tax credit rent is based on the average income in your county or other local area... Read more

Q: If I earn too much income for a tax credit property, am I ineligible for others?
A: Not necessarily. Although every tax credit property must follow the same rules to determine income eligibility, you may earn too much... Read more

Q: Can I get evicted if my income goes way up after I move in?
A: You shouldn't have to worry about getting evicted for going over income. If your income rises to as high as 140% of area median gross income (AMGI), there's no problem... Read more

Q: Do I need to get recertified each time my income changes?
A: Fortunately, no. The tax credit program doesn't have "interim recertifications," which means if you switch jobs, get a raise... Read more

Q: Can I live at a tax credit property if I'm a student?
A: The general rule is that if everyone in your household is a full-time student, then you can't rent at a tax credit property... Read more

Q: Must tax credit properties comply with discrimination laws?
A: Yes. Tax credit properties are subject to the same fair housing laws as conventional properties... Read more

Q: How can tenants and prospects get more information about program requirements?
A: Tenants and prospects often have questions about the income and rules for tax credit properties. In addition to the answers to frequently asked questions here on About.com, you can get state-specific questions answered by the state housing finance agency that administers the tax credit program where you live... Read more

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