The Tax Credit Reform Act of 1986 created the Low Income Housing Tax Credit Program (LIHTC). The program regulations are under Section 42 of the Internal Revenue Code. The tax credit encourages developers to build affordable housing to meet the needs of the community. As a condition for receiving Housing Tax Credits, owners must keep the units affordable for a specified number of years. Affordable rents are defined and calculated based on Median Household Income figures published annually by the U.S. Department of Housing and Urban Development (HUD).
Frequently Asked Questions
How do I determine if I am eligible for a Section 42 Tax Credit Unit?
You will be asked to complete an application that requests information regarding your household composition, income, and student status. These factors will determine your eligibility for this program.
Who determines the Maximum Qualifying Income Level?
Qualified income levels are determined by the local office of the Department of Housing and Urban Development (HUD) , based on two factors: 1) a percentage of the median household income for the county or metropolitan statistical area in which the development is located; and 2) the number of people in your household.
What is counted as income?
Your income level is based on the combined projected gross income, including income from assets, for the next 12 months of all household members 18 years of age and older.
What are assets?
Assets are those valuables, other than personal items, which must be considered when determining family income. Examples include interest from savings and checking, as well as potential income from IRAs, 401K, CDs, and real estate.
Do I have to verify my income every year?
Yes. You must recertify your income and family size before you are offered a new lease. This process starts about 90 days before your lease renewal date.
Can I add someone to my household after being approved?
The unit is being rented to you and those identified on the rental application. Any changes in household size or income must be reported in writing and may require that you reapply for eligibility.
How does Section 42 differ from other rental assistance programs like Section 8, Rural Development, or Public Housing?
The residents who live in Section 42 units must be income and program eligible, similar to residents who live in rental assistance developments. However, in rental assistance programs like Section 8 or Public Housing, the rent is based on 30-40% of the applicant’s income, and the remaining portion is subsidized by the government. In contrast, the rent that a Section 42 resident will pay is based on a fixed rental fee for the unit size rather than a percent of the resident’s income.
The Section 42 Program is not a subsidized rental program.
Special Rules for Students
The Section 42 code applies special rules to student residents. If you are a part-time student, you are exempt from the eligibility requirements. If you are over 18 and a full-time student, you must meet ONE of the following special requirements to be eligible for our housing: 1) Be married; 2) Have physical custody of your children, if you are single; 3) Participate in the Job Training Partnership Act or other similar programs funded by Federal/State/Local sources; 4) Have a member of the household receiving MFIP; 5) Have been in foster care within 5 years of initial occupancy.
The Rose Senior Living Communities in IA
Benefits to Qualified Residents
In exchange for investment tax credits, the owners of The Rose offer quality constructed apartments to income-qualified households at rents set no higher than a designated percentage of the local county’s median income as published by the Department of Housing and Urban Development (HUD), often resulting in rents lower than other comparable apartments. To receive this reduction, the owners must annually certify that the residents are qualified under the Program requirements and are paying the correct amount of rent.
Difference From Subsidized Housing
This Program is not a subsidized housing program or Section 8. Each resident is responsible for the full amount of rent each month. The rental amount is not based on individual household income, but rather on the pre-set income limits in the area.
Determining Your Eligibility
To qualify for this Program at The Rose, you must:
- be income eligible;
- not exceed prescribed medical needs requirements;
- meet The Rose Resident Selection Criteria.
To begin the qualification process, please request our Preliminary Applicant Information and Income and Asset Disclosure form, which will help pre-screen for income eligibility. It will be your responsibility to assist us in verifying all income and assets through the appropriate sources by providing the necessary information (names, addresses) to expedite this process. In addition to standard wages, income includes monies received from all sources such as pensions, social security, and asset income. Assets are your valuables other than personal items that must be considered when determining your family income. Examples include savings accounts, certificates of deposit, stocks and bonds. Personal items such as your car or furniture are not included.
Your income must be verified prior to being accepted for residency and is reviewed annually for accuracy.
For more information, contact:
Evergreen/Rose Assisted Living Communities