HUD published the 2021 income limits on April 1, 2021 with an April 1, 2021 effective date. These limits include the limits for HUD assisted properties as well as the limits for Housing Credit and Tax-Exempt Bond properties known as the Multifamily Tax Subsidy Properties (MTSP) Income Limits.
To access the limits, click the appropriate links below:
Multifamily Tax Subsidy Income Limit Data Set
ANALYSIS OF THE 2021 MTSP LIMITS
The 2021 national median income is $79,900 which is almost a 1.783% increase from 2020. As HUD caps income limit increases at twice the change in the national median income, the 2021 income increase cap is 3.57%. HUD publishes limits for 4,766 counties. Of those counties, 65% experienced an increase, 32% experienced a decrease and 3% did not change with the average change being a 1.04% increase.
HUD INCOME LIMITS
For each of your HUD-assisted properties, you will turn to the HUD Income Limit dataset unless your property is subsidy-layered. HUD assisted programs include Public Housing, Section 8 project-based, Section 8 Housing Choice Voucher, Section 202 housing for the elderly and Section 811 housing for persons with disabilities.
Please note, whereas the HOME program income limits are based on the HUD income limits, they are adjusted as per the HOME program requirements, so they are not the same. If you have HOME properties or units, continue to factor in the current HOME limits until the 2021 HOME limits are published.
MTSP INCOME LIMIT FACTS…
For each of your Housing Credit and Bond properties, you will turn to the MTSP Income Limit dataset unless your property is subsidy-layered or is eligible for the NNMGI-based income limits.
- The MTSP Income limits consist of:
- Regular 50% Limits
- Regular 60% Limits
- And possibly*…
- HERA Special 50% Limits
- HERA Special 60% Limits
*BUT the HERA Special Limits are only published
IF (1) the area was impacted by HUD’s 2007-08 Hold Harmless Policy
AND (2) the Regular limits are less than the HERA Special limits.)
- The 2021 NNMGI figure is $63,400 which results in a 50% NNMGI-based Limits as follows…
Remember, the NNMGI-Based Income Limits are for rural 9% Housing Credit properties located in states with a state non-metro AMGI that is lower than the NNMGI or properties allocated GO Zone credits and placed in service in 2006, 2007, or 2008.
INCOME LIMIT GRACE PERIOD
As per Revenue Ruling 94-57, Housing Credit income limits must be implemented on the effective date OR 45 days from the publication date, whichever is LATER. This year the new limits can be implemented on the April 1 effective date, but must be implemented no later than 45 days from the publication date, which this year is May 15, 2021. The period of time from the effective date and this required implementation date is often referred to as the New Income Limit Grace Period.
TO IMPLEMENT THE 2021 INCOME LIMITS ON YOUR HOUSING CREDIT PROPERTIES…
Housing Credit income limits are based on the building’s placed in service (PIS) date which means you must know the property’s 8609 Line 8b election. If elected…
- YES, the project is a multi-building project and the income limits will be based on the FIRST building’s PIS.
- NO, then each building is its own project and the income limits will be based on EACH building’s PIS date.
To select the correct 50% and/or 60% MTSP income limits for your properties, use the following chart….
To be sure you understand the chart as it applies to 2021, when I reference the…
- Current Regular Limits… I mean the limits you currently have in place at your property PRIOR to the release of the 2021 limits.
- New Regular Limits… I mean the 2021 non-HERA Special Limits.
- End of the New Limit Grace Period… I mean May 15, 2021.
If you need other set-asides percentages (20%, 30%, 40%, 70%, 80%, etc.)…
- Multiply the applicable 50% figures by 2 and then by the set-aside percentage needed.
- When this calculation is done, do NOT round the final figures.
If your property is subsidy layered…
- You must first determine each funding type on the property and to which units these funding sources apply as many are not 100% financed.
- You then must determine which income limit dataset the funding source uses for its income limits.
Example: HUD financing uses the HUD Income Limit dataset, Bond financing use the MTSP dataset, HOME uses its own income limits which are based on the HUD dataset but further tweaked and isn’t usually available until May or June which means you will continue to use the 2020 HOME limits until the 2021 limits are available. Look to the funding source’s regulatory agreement for this determination which is often found in the Definitions. If you cannot find it, you must contact the funding source to clarify.
- On a per unit basis, gather the applicable income limits and perform any necessary calculations.
- Use the lowest of each of these limits OR perform separate certifications for each program attached to the unit using the correct income limit associated with each program.
Example: If you have a unit that is a Low HOME and 50% Tax Credit unit, you must pull the Low Home income limits for the area and the applicable 50% MTSP limits as described above. Use the lower of these 2 limits OR when completing the HOME certification, use the Low HOME limits and then complete the Tax Credit certification using the applicable 50% MTSP limits. For the household to qualify, it must have income below BOTH of these limits.
IF YOU NEED ADDITIONAL INSTRUCTION ON INCOME LIMIT IMPLEMENTATION OR NEED TO KNOW HOW TO CALCULATE RENTS…
- Check out our online course — Housing Credits 205: Income Limits, Rents and Utility Allowances.
- It is available on demand which means it is available 24 hours a day… 7 days a week and view-able from any computer with internet access.
- The cost is $249.