Below are some common questions asked by LIHTC Section 42 tenants and prospective residents:
My landlord at a tax credit housing (LIHTC Section 42) property just raised my rent, but my income did not increase. Is that allowed?
LIHTC rents are NOT determined by your individual income. It is possible for your rent to increase even though your income did not go up.
Rents at tax credit properties are determined by (a) the income bracket (the “set-aside”) associated with the unit, (b) the number of bedrooms and (c) the first year that the property was “placed in service” (began operating in the LIHTC program.) Your property manager is allowed to charge the maximum rent that is associated with the LIHTC set-aside.
The maximum rent calculation uses a formula that is based upon the median (similar to an average) income in your area. That maximum rent amount is reduced by an allowance for utility costs that are paid by the tenant (including gas, electric, water, trash and sewage, but excluding telephone, internet and cable service.)
If you are an LIHTC tenant with Section 8, then the Section 8 rules will determine your share of the rent.
How can I determine whether I am paying too much rent at a LIHTC property?
If you have questions about how your rent was determined, your property manager should be able to provide you with that information. You may want to verify the set aside for your unit.
Rental rate compliance rules for Section 42 properties are quite strict. It is highly unlikely that you are being overcharged for your rent.
How are maximum tax credit rents calculated?
Tax credit rents are set based upon a formula that accounts for typical incomes in your area and the number of bedrooms in the housing unit, which is then reduced based upon the typical cost of utilities in your area (the “utility allowance”.) LIHTC rents are NOT determined by your individual income.
How often can LIHTC (Section 42) properties raise their rents?
The median income and utility allowance figures that determine your maximum rent are calculated each year.
In most cases, this means that rents may increase every year. Annual rent increases of 1-2% are not uncommon. Current residents, including long-term tenants, may also have their rents increased, subject to the terms of their leases.
If you are an LIHTC resident with questions about your rent being increased, your property manager should be able to assist you.
How is tax credit (LIHTC Section 42) housing different from Section 8 and public housing?
The tax credit housing program (also referred to as “Section 42” or “LIHTC”) is a federal program that provides funding for the construction and rehabilitation of rent-controlled housing that serves lower-income households.
Most Section 42 units are developed and operated by private for-profit companies and non-profit organizations, and are not public housing (owned by the government).
Section 8 is a federal subsidy program that helps tenants to pay rent, based upon the tenant’s income. Some Section 42 properties have Section 8 contracts that help tenants to pay their rent, but most do not.
Public housing is housing owned by government agencies, such as local housing authorities.
There is some overlap between the three programs, although they are largely separate.
Some Section 42 tax credit housing is also public housing, although much of it is not. Section 8 can be used to subsidize rents in both tax-credit housing and market-rate housing.
I have a friend, relative, roommate or significant other who wants to move into my tax credit (LIHTC Section 42) unit. Is that allowed?
Because tax credit units are subject to income eligibility requirements, LIHTC leases name every individual who is allowed to live in the unit, including adults and children. The incomes of every member of the household must be taken into account when determining income eligibility. (An exception is made for full-time caregivers.)
You cannot have someone move into the unit unless that person has been income-qualified and otherwise approved by your landlord to live there. The incomes of anyone who moves in will have to be determined prior to move-in. It is possible that this could affect your eligibility to remain in your unit. You should contact your property manager prior to allowing anyone else to move in.
I just got a raise at work and/or a new job. Do I have to get recertified right away?
No. Recertification is an annual requirement. Interim updates are not required and you do not have to be recertified immediately.
Since I moved into my tax credit (LIHTC Section 42) apartment, my income has increased so that it is now over the tax credit limit. Do I have to move out?
The Section 42 program does not require you to move out because your income has increased. If your income increases to a level that is above 140% of the area median at a tax credit property that includes market-rate units, then your unit may be redesignated as a market-rate unit.
I have a criminal record and/or very poor credit. Does a tax credit (LIHTC Section 42) property have to let me move in?
No. Tax credit property managers can review your rental history and criminal background, and they may reject you if you do not meet their standards. Policies can vary from property to property: some may be lenient or willing to work with you, while others have very strict standards.
I have a Section 8 rental voucher. Can I use it at a tax credit (LIHTC Section 42) property?
Tax credit properties cannot turn you away because you have a voucher, although having a voucher does not guarantee that you will be able to move in.
There is a lot of paperwork. Why do I have to fill out so many forms?
Tax credit apartments are part of a federal program that provides housing to households with limited incomes. The program requires thorough documentation about everyone who will live in the unit and their financial resources so that the housing is not rented to those who earn too much.
Each state has its own version of the required paperwork. Property managers are obliged to follow these state requirements. The landlord will also have its own documents in addition to those that are required by the state.
In many cases, tax credit residents must be recertified every year. We appreciate that this may be a burden to you, but please be patient with your property manager who is obliged to comply with these regulations.
How difficult is it to find a tax credit (LIHTC Section 42) unit for rent?
Demand for tax credit housing varies from place to place. In major cities, particularly where market rents are very high, tax credit apartments may be very difficult to find. But there are other locations where these Section 42 apartments are more readily available. LIHTC properties often maintain waiting lists; it may be worth adding your name to the waiting lists of those properties that interest you.
I am being evicted. What should I do?
We cannot provide legal advice, and laws vary widely from area to area. You may want to contact an attorney who is knowledgeable of landlord-tenant law and the eviction process in your area.
Section 42 units are subject to “good cause” eviction rules. Click here for more information from the National Housing Law Project.
Our apologies, but we cannot assist tenants with questions about rent increases and other tenant-related issues. We hope that you found this information to be useful.
DISCLAIMER: We do not make any warranties about the completeness, reliability and accuracy of the information on this website. Please use this information at your own risk; we will not be liable for losses or damages that you may incur.