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Guide for Completing Form 8823 - page 67 / 197





67 / 197

Income Ineligible Households

Initial Tenant Income Certification is Late


The household may be income certified as if it were a new move-in. If the household is eligible under the applicable move-in income limit in place on the date of the new certification, then the unit would be considered back in compliance.

Example 1: Ineligible Household Occupies LIHC Unit

The household was over the appropriate income limit at move-in on June 1, 2002. The error was discovered during the state agency’s review on April 3, 2003.

The owner may treat the household as a new tenant and complete a new income certification using the income limits in effect on April 3, 2003. If the household is qualified, the noncompliance is corrected. The unit is out of compliance from June 1, 2002 until April 3, 2003. If, upon certification, the household is not income-eligible, the unit is considered back in compliance when a new income- qualified household moves into the unit. In either scenario, a Form 8823 noting the noncompliance must be filed.

If the initial certification is late, the unit is considered out of compliance as of the date the tenant moved into the LIHC unit and back in compliance on the date the completed income certification, indicating the household is income qualified, is signed by all the tenants.

Example 1: Initial Tenant Income Certification Performed After Move-In (Late Certification)

A household moved into an LIHC unit on August 4, 2003. However, certification of eligibility, including the third party verification, was not completed until September 15, 2004. If the tenant income certification meets all the requirements, the unit is considered in compliance beginning on September 15, 2004.

Note: Noncompliance with the initial income certification requirements that is identified and corrected by the owner retroactive to move-in and prior to notification of the compliance review by the state agency need not be reported; i.e., the owner has demonstrated due diligence by addressing noncompliance issues independently. See chapter 3.

  • 1.

    IRC § 42(g)(1)

  • 2.

    Treas. Reg. 1.42-5(b)(1)(vii) states that “[t]enant income is calculated in a manner consistent with the determination of annual income under Section 8 of the U.S. Housing Act of 1937.”

  • 3.

    *HUD Handbook 4350.3 as revised June 2007 is the authority for further information on calculation of annual income. HUD publishes updated 50% Median Family Income limits annually. Other income limit schedules such as the 60% limits are based on an extrapolation of the 50% limits.*

  • 4.

    Rev. Rul. 89-24, 1989-1 C.B. 24


Revised October 2009

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