Despite concerns that the 2020 Income Limits might be delayed due to the coronavirus pandemic, HUD published them today with an April 1, 2020 effective date. 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 means this year’s limits must be implemented no later than May 15, 2020.
To access the limits, click the appropriate links below:
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 2020 NNMGI figure is $62,300 which results in a 50% NNMGI-Based Limits as follows…
- Analysis of the 2020 MTSP Limits… The 2020 national median income is $78,500 which is almost a 4% increase from 2019. As HUD caps income limit increases at twice the change in the national median income, the 2020 income increase cap is 7.9%.
- 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, 2020. 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 2020 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 2020, 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 2020 limits.
- New Regular Limits… I mean the 2020 non-HERA Special Limits.
- End of the New Limit Grace Period… I mean May 15, 2020.
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 2019 HOME limits until the 2020 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.