DETERMINING TENANT ELIGIBILITY

Transcription

1 Sectio 3/Determiig Teat Eligibility Tax Credit Compliace Maual DETERMINING TENANT ELIGIBILITY Teat Eligibility for LIHTC Icome ad studet status must be cosidered Household Size 3.1 Overview O wers must determie ad documet the eligibility of potetial low-icome teats i accordace with LIHTC requiremets. A teat s icome eligibility is determied by comparig the household s gross aual aticipated icome per HUD guidelies to the LIHTC 50% or 60% area gross media icome limits that apply to the project. As previously metioed i Sectio 2.7(H) of this maual, studet status may also affect the eligibility of a household. Owers must verify the household s icome ad the studet status of all household members ad the teat ad ower must certify the accuracy of the verified iformatio. Sice household compositio, icome, ad studet status may chage over time, owers must re-certify the eligibility of teats i tax credit uits aually, o or before the aiversary date of the previous certificatio. 3.2 Household Size ad Icome Limits Sectio 42 madates that HUD icome limits as adjusted for household size be used i determiig icome eligibility for the LIHTC. A household ca cosist of oe or more persos. Members do ot eed to be related to be cosidered a household. Cout all household members ad compare to the per perso 50% or 60% icome limits curretly i effect. Fulltime studets residig together i a uit do ot costitute a household uder LIHTC requiremets uless oe of the exceptios listed i Sectio 2.7(H) applies. Certai idividuals are ot cosidered members of the household i determiig the icome limits. Do NOT cout the followig i determiig icome limits: Live-i Attedats Visitors or Guests Foster Childre Foster Adults Temporarily abset members who would be icluded i the household size determiatio iclude: 3-1

2 Sectio 3/Determiig Teat Eligibility Tax Credit Compliace Maual Note: Spouses ot curretly residig with the applicat but who may retur are couted as household members. Separatio agreemets, estragemet ad divorce documets must all be o file to exclude icome of spouses that are ot expected to become members of the household. Childre temporarily abset due to placemet i a foster home Childre away at school, but who live with the family durig school recesses A perso cofied to a hospital or ursig home per family decisio A so or daughter o active military duty oly if this perso leaves depedets or a spouse i the uit CHFA recogizes ubor childre ad childre i the process of beig adopted as household members i determiig icome limits. Ubor childre ad childre beig adopted are couted for icome limits Defiitio of Icome 3.3 Gross Aual Icome T he code states Teat icome is calculated i a maer cosistet with the determiatio of aual icome uder Sectio 8 of the Uited States Housig Act of 1937 ( Sectio 8 ), ot i accordace with the determiatio of gross icome for federal icome tax liability. I the HUD Hadbook REV-1, 5-3 aual icome is defied as the aticipated total icome from all sources received by the family head ad spouse (eve if temporarily abset) ad by each additioal member of the family, icludig all et icome derived from assets for the 12-moth period followig the effective date of certificatio of icome, exclusive of certai types of icome. 3-2

3 Sectio 3/Determiig Teat Eligibility Tax Credit Compliace Maual Total Icome from all Sources Gross Eared/ Ueared Icome + Net Icome from Assets = Aual Icome = Aual Icome For iformatio regardig what aual icome icludes/excludes ad how to calculate aual icome, see Sectio 23 for excerpts from HUD Hadbook REV-1, Chage 2, 5-6. Note that LIHTC total icome is gross aual icome, ot adjusted aual icome. Allowaces used i some govermet programs, such as childcare allowace ad medical expese allowace, are ot deducted from the household s aual gross icome to determie icome eligibility for LIHTC uits. Net Asset Icome Cash value of assets ad asset icome must be verified for etire household If et assets >$5,000 use the greater of actual icome or imputed icome If et assets < $5,000 Maagemet may use the Uder $5,000 Asset Form. Assets disposed of for less tha fair market value must be cosidered assets for two years. 3.4 Assets T he et icome from assets must be cosidered whe determiig the tax credit eligibility of a household. Asset iformatio for all household members (icludig miors) should be obtaied at the time of applicatio. Iformatio regardig what et family assets iclude/exclude is provided i [Sectio 23] excerpts from HUD Hadbook REV-1, Chage 2, 5-83, Exhibit 5-2. The cash value for all assets ad asset icome must be verified by the ower obtaiig third party documetatio as specified by HUD verificatio procedures. Owers may use the swor statemet for assets refereced uder IRS Reveue Procedure [Sectio 17]. Assets must be verified for the iitial certificatio of the household ad for each recertificatio. If utilizig the procedure 94-65, please be aware that the icome from the asset must always be idetified ad icluded as icome o the certificatio. If et family assets exceed $5,000, the asset icome to be icluded i household icome will be the greater of: (a) the actual asset icome, or (b) a imputed icome from assets, which is the et family assets multiplied by the passbook rate specified by HUD. Util further otice, owers must use a rate of 2 percet (.02). At each certificatio ad aual certificatio, applicats ad teats must declare whether or ot a asset has bee disposed of 3-3

4 Sectio 3/Determiig Teat Eligibility Tax Credit Compliace Maual for less tha fair market value durig the two years precedig the date of applicatio or the effective date of the recertificatio. A asset is cosidered to be disposed of for less tha fair market value if the cash value of the disposed asset exceeds the gross amout the family received by more tha $1,000. If it does, for a period of two years owers must iclude i the total household assets the differece betwee the cash value of the asset ad the amout received. See [Sectio 23] HUD Hadbook excerpts 5-33 for examples of assets disposed of for less tha fair market value. Applicatio Procedure 3.5 Teat Applicatio Procedure B ecause the LIHTC program uses special defiitios for icome, assets, ad household compositio, stadard property maagemet applicatio forms may ot collect sufficiet iformatio to determie teat eligibility. A comprehesive housig applicatio is critical to the accurate idetificatio of full-time studet status, all assets, ad aticipated icome sources to be verified i the determiatio of teat eligibility for the LIHTC. The applicatio must be sufficietly detailed with regard to icome, assets, ad studet status eablig a ower to effectively make a determiatio of eligibility for this program. The Applicatio for Housig, icluded i Sectio 6 of this maual, is required for use by all tax credit properties i Coecticut. The iformatio furished o the fully completed applicatio is reviewed alog with supplemetary historical documets (i.e., most recet 1040 form, divorce decree, etc.) submitted with the applicatio. Iterview Checklist The applicatio procedure must iclude a iterview with all adult household members to review the applicatio ad historical documets ad clarify ay discrepacies or missig iformatio. (For example, if the recet 1040 form ad W-2s show two employers, but the applicatio oly lists oe, questio what happeed to the secod job ad cofirm its termiatio.) This iterview is documeted with the required Iterview Checklist, also icluded i [Sectio 6] which is siged ad dated by maagemet ad all adult applicats. Oe applicatio ad iterview checklist siged by all coapplicats should be submitted per household. 3-4

5 Sectio 3/Determiig Teat Eligibility Tax Credit Compliace Maual 3.6 Teat Icome Verificatio D etermiatio of aual icome of idividuals ad area media gross icome adjusted for family size must be made i a maer cosistet with HUD Sectio 8 icome defiitios ad guidelies. HUD Hadbook REV-1 is the referece guide to be used for idetifyig the icome/assets to be icluded or excluded whe determiig household icome ad appropriate excerpts from the HUD Hadbook REV-1 are icluded i Sectio 23 of this maual. Verifyig Icome The aticipated eared icome of every prospective household member 18 years of age or older must be verified. Ueared icome, assets ad asset icome of all household members, icludig miors, must be verified. Verificatios must be received by the ower/ maagemet aget prior to the executio of the certificatio of teat eligibility ad lease. Iformatio cocerig acceptable forms of verificatio, the effective term of verificatios, proper verificatio methods to follow, ad how to calculate total icome is provided i HUD Hadbook REV-1 icluded i [Sectio 23]. To summarize: A. Effective Term of Verificatios Third-party verificatios are valid for 120 days followig receipt. Owers may ot rely o verificatios that are more tha 120 days old. After this time, a ew writte verificatio must be obtaied. B. Verificatio Methods Writte third party verificatios are preferred. A authorizatio to release iformatio must be siged by the applicat/teat ad must accompay verificatio requests. Owers must sed verificatios directly to the source ad the source must retur them directly to the ower. Verificatios must ot be had-carried by the applicat/ teat to or from the source. If writte verificatio is ot possible, direct cotact with the source, i perso or by phoe, is acceptable. The ower must documet this verbal verificatio i the teat file ad must obtai all iformatio as requested o the writte verificatio [See Sectio 23 HUD Hadbook REV-1, 5-49]. 3-5

6 Sectio 3/Determiig Teat Eligibility Tax Credit Compliace Maual Note: Whe calculatig icome, be coservative. If you decide a lesser umber is warrated explai why. Use of telephoe clarificatios whe iformatio is icomplete or vague is ecouraged. Certificatio of Icome Note: The purpose of the certificatio worksheet is to show the math that results i the amouts listed o the Teat Icome Certificatio. Cosider highlightig the figures o the verificatio that are used. Lease C. Differeces i Reported Icome Sigificat differeces betwee the icome/asset amouts reported o the applicatio ad amouts reported from third party verificatios should be explaied by the applicat/ teat ad documeted i the teat file utilizig a form such as the Telephoe Verificatio. Required verificatio forms are icluded i Sectio 6. If forms curretly i use at your property are comparable to the forms i this sectio, you must receive permissio from CHFA to cotiue to use your curret forms. Nocompliace will occur if forms i use do ot adequately meet LIHTC ad HUD certificatio or verificatio requiremets. 3.7 Teat Icome Certificatio O ce all the icome ad asset iformatio has bee obtaied, data should be recorded ad computatios doe o the Certificatio Worksheet foud i Sectio 6. If the total 12-moth projected household icome is less tha or equal to the maximum allowable qualifyig icome i effect at the time of teat certificatio, the household is icome eligible for a tax credit uit. If the total household icome exceeds the maximum allowable qualifyig icome, the household ca ot be certified eligible for a tax credit uit. Upo receipt of all verificatios, owers/maagers should review all documetatio ad calculatios. If it is determied that all requiremets for eligibility are met, the Certificatio of Teat Eligibility foud i Sectio 6 must be filled out ad executed alog with the lease prior to move-i. All adult members of the household must sig the Certificatio form. It is preferred that the Certificatio be executed by teats ad ower/maager o earlier tha 5 caledar days prior to move-i ad i o evet after the executio of the lease. 3.8 Lease A ll teats occupyig tax credit uits must be certified ad uder lease (as specified i the Code) o later tha the date the teat takes possessio of the uit. The lease must be siged by all parties to the agreemet by the begiig lease term date to be properly i effect ad the uit i compliace. 3-6

7 Sectio 3/Determiig Teat Eligibility Tax Credit Compliace Maual Note: Leases must be siged i good faith. A umber of short teacies despite a six moth lease ca raise questios about procedures. If a teat vacates early, cosider icludig a explaatio (if kow) i the file. Note: Oly whe a teat receives Sectio 8 subsidy ca the teat portio of ret exceed the LIHTC maximum ret limit. While CHFA does ot require a model lease to be used by owers, it is recommeded that owers have their leases reviewed by legal coucil i order to cofirm that it meets the requiremets of the Coecticut State Statues. Some leasig guidelies are listed below. A. The lease should iclude, but is ot limited to: The legal ame of all parties to the agreemet ad all additioal occupats Idetificatio of the uit to be reted (umber, street address, etc.) The date the lease becomes effective The term of the lease The amout for ret If this reflects a cotract ret amout which may iclude a subsidy paymet, rather tha just the teat portio of the ret, a lease addedum listig oly the teat share of ret is recommeded. The rights ad obligatios of the parties, icludig the obligatio of the teat to recertify icome aually (or more frequetly as required). The lease addedum TC-100B or TC-100B(1) must be attached to or icluded i the lease Laguage addressig chages i icome, utility allowace, icome limits, basic ret (RD or HUD 236 projects), family compositio or ay other chage ad its impact o the teat s ret Sigature dates B. The teat portio of ret plus utility allowace ad other madatory fees must ot exceed the maximum gross ret allowed by Sectio 42 of the Code. C. The iitial lease term must be at least 6 moths o all tax credit uits, except for SRO housig which may have a 30- day lease or trasitioal housig for the homeless (as specified i Sectio 2.7(F) of this maual) which provides temporary housig ad has o lease requiremet. Succeedig leases are ot subject to a miimum lease term. The begiig term of the lease ad effective date of the certificatio should be cocurret. Sigatures should be o greater tha 5 days prior to these dates. Additioally, the lease should ot cotai ay clauses that would allow termiatio prior to the six moth tax credit requiremet. 3-7

8 Sectio 3/Determiig Teat Eligibility Tax Credit Compliace Maual Recertificatio Aual certificatios esure affordable housig uits are occupied by icome eligible households, ad provide a meas to esure compliace with the Next Available Uit Rule ad studet status. 3.9 Recertificatio Recet chages i IRS regulatios o loger require aual certificatios for properties that are 100% tax credit. Allocatig agecies ca still require them ad CHFA is o exceptio. FOR 100% TAX CREDIT AND TAX EXEMPT BOND PROPERTIES: C HFA requires that recertificatio of residets be completed o at least a aual basis (though failure to recertify teats o a aual basis is o loger cause for the issuace of IRS Form 8823). What is required has chaged sigificatly. Every LIHTC household is expected to udergo a complete aual recertificatio the year followig move i. Subsequet years, require a self-certificatio. (See forms i Sectio 6.) CHFA ca require properties that have reted to ieligible households or demostrated iadequate certificatio/ documetatio procedures to revert to full aual recertificatio procedures as with properties cotaiig market uits. FOR PROPERTIES WITH MARKET UNITS: Sectio 42 states: The determiatio of whether the icome of a residet exceeds the applicable icome limit shall be made at least aually o the basis of the curret icome of the residet. While the recert does ot determie cotiued eligibility, it does idetify the 140% rule situatio, studet status, ad possible household compositio chages. Properties with market uits must complete a full aual recertificatio every year. Self certificatios caot be used. FOR ALL PROPERTIES: The timig of the recertificatio is critical. Recertificatio must be completed withi 12 moths from the iitial certificatio date, or 12 moths from the most recet certificatio. 3-8

9 Sectio 3/Determiig Teat Eligibility Tax Credit Compliace Maual Sectio 8 Qualificatio Note: With a Sectio 8 teat your aual recertificatio folder could cosist of just two documets. The certificatio ad a Sectio 8 icome verificatio Form. Be careful to esure that the iformatio provided is o more tha 120 days old Qualifyig Sectio 8 Teats A dditioal forms of icome verificatio may be used for teats who receive housig assistace through the HUD Sectio 8 program. For these teats oly, acceptable forms of icome verificatio iclude a siged copy of the appropriate HUD form or 50059, a letter from the HUD Cotract Admiistrator (e.g., local PHA) statig that the teat s aual gross icome is less tha the applicable LIHTC icome limit, OR a Sectio 8 verificatio form as foud i Sectio 6. These forms may be used as icome verificatio documetatio to support the Certificatio of Teat Eligibility which must be executed for every LIHTC household. Proof of tax credit eligibility must be o file for all Sectio 8 teats. Sectio 8 eligibility does ot guaratee tax credit eligibility. Studet requiremets will ever be idetified or verified by the local PHA. Proof of icome eligibility ad tax credit eligibility is the resposibility of the ower. 3-9