HUD PIH Notice § 2023-27
Implementation Guidance: Sections 102 and 104 of the Housing Opportunity Through Modernization Act of 2016 (HOTMA) (HUD PIH Notices)
HUD guidance — not codified law
In Force
Verified 10/26/2026 · Next check 11/2/2026
effective 10/6/2026FederalAffordable Housing ProgramsOperative Text
HUD PIH Notice § 2023-27
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of Housing
Office of Public and Indian Housing
Special Attention of: Notice H 2023-10/PIH 2023-27 (Revision 3)
Multifamily Asset Management Division Issued: April 16, 2026
Directors This notice was originally issued September
Multifamily Contract Administrators 29, 2023 and reissued February 2, 2024.
Multifamily Project Owners
Multifamily Regional Center Directors Expires: This notice remains in effect until
Public Housing Agencies amended, superseded, or rescinded.
Public Housing Hub Office Directors Cross References:
Public Housing Program Center Directors
Regional Directors Regulations: 24 CFR Parts 5, 882, 891, 960,
Field Office Directors 966, 982
Resident Management Corporations Office of Housing Notices: H 2020-06; H
2019-06; H 2016-01; H 2015-12; H 2025-07
Office of Public and Indian Housing Notices:
PIH 2019-09; PIH 2017-05; PIH 2016-05;
PIH 2015-21; PIH 2013-04; PIH 2012-29;
PIH 2012-03; PIH 2012-1; PIH 2024-38
Joint Notices: 71 FR 18146
Implementation Guidance: Sections 102 and 104 of the Housing Opportunity Through
Modernization Act of 2016 (HOTMA), Revision 3
1. PURPOSE
The purpose of this notice is to provide guidance to Public Housing Agencies (PHAs) and
Multifamily Housing (MFH) Owners on the implementation of the many program
changes brought about by the Housing Opportunity Through Modernization Act of 2016
(HOTMA) sections 102 and 104 and detailed in the final rule published in Federal
Register Notice 88 FR 9600 on February 14, 2023. Although the final rule addresses
sections 102, 103, and 104, this notice addresses guidance for sections 102 and 104 only.1
Through this notice, HUD is also modernizing its documentation requirements to reduce
the burden on families accessing housing assistance in support of Office of Management
and Budget (OMB) Memo M-22-10, Improving Access to Public Benefits Programs
Through the Paperwork Reduction Act.
1
The Office of Public and Indian Housing (PIH) published a separate notice on section 103 of HOTMA. See
Supplemental Guidance for Implementation of Section 103; Limitation on Public Housing Tenancy for Over-Income
Families under the Housing Opportunity Through Modernization Act of 2016 (HOTMA) (Notice PIH 2023–03
(HA)).
www.hud.gov
2. BACKGROUND
HOTMA was signed into law on July 29, 2016 (Public Law 114–201, 130 Stat. 782). The
HOTMA statute consists of 14 sections of law that affect the Public Housing and Section
8 rental assistance programs. On September 17, 2019, HUD issued a proposed rule to
update its regulations according to HOTMA’s statutory mandate. The proposed rule may
be found at 84 FR 48820 (September 17, 2019).
Sections 102 and 104 of HOTMA make sweeping changes to the United States Housing
Act of 1937 (1937 Act), particularly those affecting income calculations and reviews.
Section 102 changes requirements related to income reviews for Public Housing and
Section 8 programs. Section 104 sets maximum asset limits for Public Housing and
Section 8 applicants and participants.
Section 102 of HOTMA applies to all PHAs operating a Housing Choice Voucher (HCV)
(including Project-Based Vouchers), Public Housing; Section 8 Moderate Rehabilitation,
or Section 8 Moderate Rehabilitation Single Room Occupancy (SRO), including Moving
to Work (MTW) Agencies (see Section 4 (Notice Applicability) of this notice). Section
102 also applies to the following programs administered by MFH: Section 8 Project-
Based Rental Assistance (PBRA), 202/8, 202/162 Project Assistance Contract (202/162
PAC), Section 202/811 Capital Advance with Project Rental Assistance Contract
(202/811 PRAC), non-insured 236 projects with Interest Reduction Payments (236 IRP),
Section 811 Project Rental Assistance Demonstration (811 PRA), and Senior
Preservation Rental Assistance Contracts (SPRAC).2 Section 102 is effective on January
1, 2024.
Section 104 of HOTMA applies to all PHAs operating an HCV, Public Housing, Section
8 Moderate Rehabilitation, or Section 8 Moderate Rehabilitation SRO program, including
MTW Agencies (see Section 4 (Notice Applicability) of this notice). Section 104 also
applies to the following programs: Section 8 PBRA and 202/8. Section 104 does not
apply to following programs: 202/811 PRAC, 236 IRP, 811 PRA, 202/162 PAC, and
SPRAC. Section 104 is effective on January 1, 2024.
HUD, through rulemaking,3 implemented sections 102 and 104 through several changes
to the following Public Housing and Section 8 regulations:
24 CFR Part 5: General HUD Program Requirements; Waivers
24 CFR Part 882: Section 8 Moderate Rehabilitation Programs
24 CFR Part 960: Admission to, and Occupancy of, Public Housing
24 CFR Part 982: Section 8 Tenant-Based Assistance: Housing Choice Voucher
Program
2
HUD administratively extended the applicability of Section 102 of HOTMA to the following programs: 202/162,
202/811 PRAC, 811 PRA, and SPRAC.
3
Federal Register: Housing Opportunity Through Modernization Act of 2016: Implementation of Sections 102, 103,
and 104.
2
HUD also made conforming changes to its regulations found in 24 CFR Part 891, which
govern the Section 202 and 811 Capital Advance programs and the Section 202 Direct
Loan program (202/8). These programs are affected by various changes to the income
regulatory provisions in 24 CFR Part 5. HUD, in error, did not make conforming changes
to certain Section 202 Direct Loan regulations, consistent with the HOTMA final rule, in
24 CFR Part 891, Subpart E, including 891.655, 891.740, and 891.750, which govern
202/162 PAC projects. HUD published conforming changes to the Section 202/162 PAC
program regulations as a technical correction that will become effective on January 1,
2024.4 The revised Section 202 Direct Loan regulatory references in this notice will
become effective with the effective date of the forthcoming technical correction.
Note: The final rule does not otherwise revise or modify any other federal laws or
regulations. PHAs/MFH Owners must continue to follow all laws and regulations as
codified in statute and in the Code of Federal Regulations.
2.1 Technical Corrections and Clarifications
Changes Made on February 2, 2024:
HUD has updated Attachment A to address the asset limitation found in Section 104 of
HOTMA, and replaced the previous Attachment A that included placeholder language. In
addition, HUD has made several technical corrections and added clarifying language
throughout the notice, based on feedback from stakeholders and further analysis of the
HOTMA Income and Assets Final Rule and related laws and regulations. These changes
from the previous version of the notice published on September 29, 2023, are listed here
as follows:
Throughout the notice, HUD has added both the references to the 202/162 PAC
program and the program’s regulations as the conforming changes to the program
were issued through the following Federal Register notice:
https://www.federalregister.gov/documents/2023/11/02/2023-24236/section-202-
direct-loan-technical-amendments.
In Attachment B, subtopic B.2, HUD added clarifying language on the three-step
process for calculating income, specifically for Step 2, adding that the PHA/MFH
Owner may use the verification obtained during an interim reexamination for an
annual reexamination if there have been no other changes to annual income since the
interim reexamination. In Step 3, HUD replaced the word “paycheck” with “pay
stub.” In the example B1, HUD changed the SSA COLA amount to the actual 2024
COLA amount of 3.2 percent. In the example B3, HUD changed “four current and
consecutive paystubs” to “two current and consecutive paystubs.” In example B4,
HUD changed the COLA amount to 3.2 percent and adjusted the calculations.
In Attachment C, subtopic C.2, HUD clarified that while the elderly/disabled family
deduction is effective on January 1, 2024, PHAs/MFH Owners will apply the new
deduction amount to a family’s next annual or interim reexamination, whichever is
sooner, following the date on which the PHA/MFH Owner implements the new
elderly/disabled family deduction.
4
Federal Register :: Public Inspection: Direct Loan Technical Amendments.
3
In Attachment C, subtopic C.4.a, HUD clarified that the phased-in relief for the health
and medical care expenses deduction will not start until after the PHA/MFH Owner
implements the phased-in relief. Likewise, in the Phased-in Relief Timing Table
(Table C1), HUD replaced the date of January 1, 2024, with the date on which the
PHA/MFH Owner implements the phased-in relief.
In Attachment C, subtopic C.5, HUD edited the phrase “age 12 and younger” to
“under 13 years of age,” to align with HUD’s definition of “child-care expenses” in
24 CFR 5.603. HUD also clarified in this subsection that the amount of child-care
expenses (not the expenses incurred to enable a family member to work) deducted
from annual income must not exceed the amount of employment income that is
included in annual income.
In Attachment C, subtopic C.6.b, HUD edited the date by which PHAs/MFH Owners
are encouraged to communicate the new hardship exemptions to applicants and
families, replacing January 1, 2024, with the date on which the PHA/MFH Owner
begins to comply with HOTMA.
In Attachment C, subtopic C.7, HUD added another example of a permissive
deduction that PHAs may choose to establish, which is the amount paid from a
family’s annual income, and not another source such as Medicaid or a child welfare
agency, for unreimbursed health or medical expenses of a foster child or a foster
adult. In Attachment E, subtopic E.2, HUD clarified that PHAs may establish a
permissive deduction to allow the unreimbursed health and medical expenses paid by
the family on behalf of foster children and adults to be deducted from annual income.
In Attachment F, subtopic F.1, HUD added clarifying language to address how
PHAs/MFH owners must consider garnished, levied, or withheld wages or benefits.
In Attachment F, subtopic F.4.e, HUD updated the method for subtracting federal tax
refunds and refundable tax credits from assets to accurately reflect the statutory and
regulatory requirements of HOTMA. Previously, the notice stated that the tax refund
was to be subtracted from the asset account into which the tax refund amount was
deposited. To align with HOTMA, the tax refund must instead be subtracted from the
total value of net family assets. HUD deleted the reference to a tax refund or
refundable tax credit that is deposited into an excluded asset, as this is incorrect. The
tax refund/credit amount must be subtracted from total net family assets, regardless of
where the amount is deposited. In example F2, HUD clarified that the Rodriguez
family owns a total of $10,000 of net family assets.
In Attachment F, subtopic F.5, with regard to the start date for using the HUD-
published passbook rate, HUD updated the date of January 1, 2024, with the date on
which the PHA/MFH Owner implements the new passbook rate, and added clarifying
language on PHA flexibility around passbook rates up until they implement the new
passbook rate.
In Attachment F, subtopic F.6.b, HUD added clarifying language on how PHAs/MFH
Owners are to impute asset income using the HUD-published passbook rate.
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In Attachment G, subtopic G.1.f, HUD clarified that non-recurring, non-monetary in-
kind donations from friends and family may be excluded as non-recurring income.
In Attachment G, subtopic G.6, HUD clarified that workers’ compensation payments,
regardless of the length or frequency of the payments, are always excluded from
annual income. HUD updated example G6 to reflect this clarification.
In Attachment G, subtopic G.16.d, HUD corrected the example reference to example
G13, and reversed the wording on the process for calculating the excess amount of
student financial assistance to include in annual income. The previous one-step
process, as described, was incorrect. This error was also corrected in Chart G2.
In Attachment I, subtopic I.2, HUD clarified in the PHA/MFH Owner discretion
section that PHAs/MFH Owners have discretion on whether to process earned income
increases only if there has been a previous interim decrease since the last annual
reexamination. In Attachment J, subtopic J.1, HUD added a clarifying footnote (J1) to
reduce confusion about the Form HUD–9886/HUD–9887 requirements for family
members who become a head of household, co-head, or spouse.
In Attachment J, Table J1, HUD added instructions on the use of EIV for new
admissions in the row on Income Information for PIH Programs and Income Report
for MFH Programs. HUD also added a footnote reminding PHAs/MFH Owners that
they must rely on other documents to verify families’ reported income before
admission.
In Attachment J, Table J2, Level 6, HUD clarified that PHAs/MFH Owners must pull
the EIV Income Report for each family at every Annual Reexamination, unless using
Safe Harbor documentation to verify the family’s income. HUD also added to the
Level 1 row that self-certification may be used as the highest form of verification
when the family reports zero income.
In Attachment J, subtopic J.5.a, HUD clarified that PHAs/MFH Owners are required
to obtain a minimum of two current and consecutive pay stubs for determining
projected annual income from wages when they are relying on pay stubs for Level 4
documentation.
HUD renamed subtopic J.8 in Attachment J to “Zero Income Procedures” and
updated this section to include guidance to PHAs/MFH Owners on accepting
families’ self-certifications of zero income at admission and reexamination without
taking further steps to verify the zero reported income.
HUD added the Appendix: Sample Net Family Assets Self-Certification Form.
Changes Made on April XX, 2026:
In Section 4, HUD clarified that this notice is applicable to non-insured 236 projects
with Interest Reduction Payments (236 IRP) or an active 236 IRP Use Agreement.
HUD replaced Section 6.1 to point readers to Notice PIH 2024-38. HUD revised the
compliance deadline in Section 6.2 to reflect Notice H 2025-07 and Notice H 2024-
04.
5
In Section 7.2, HUD clarified that Notice PIH 2018-24 remains useful guidance and
enumerated specific provisions that are rescinded.
In Attachment C, HUD corrected a typo in example C1 to clarify that families
receiving the phased-in relief use a 5% threshold in the first year.
In Attachment G.16.d, subtopic, HUD corrected example G15 to reflect that loan
programs cited in the Higher Education Act of 1965 (the Perkins, Stafford, and Plus
loans) are not included in the term “financial assistance” in determining student
eligibility for Section 8 assistance, in line with Federal Register Notice 71 FR 18146.
Attachment I, subtopic I.3 has been added to revise the policy that requires use of a
lower threshold to process interim reexaminations under certain circumstances. HUD
is requiring PHAs/MFH Owners to apply a 0-percent threshold and process an interim
reexamination when someone is added to or removed from a household, whether that
results in a decrease, increase, or no change in adjusted income.
3. BURDEN REDUCTION AND PROGRAM ALIGNMENT
OMB Memo M-22-10, Improving Access to Public Benefits Programs Through the
Paperwork Reduction Act, challenges federal agencies to review documentation
requirements for those accessing public benefits programs like HUD’s rental assistance
programs. Through the process of implementing HOTMA, HUD has reviewed its
verification and documentation requirements for admission and continued occupancy,
including the use of HUD’s Enterprise Income Verification (EIV) system in the Public
Housing, Housing Choice Voucher, and the Multifamily Housing programs listed above.
These programs share regulatory language around the requirement to obtain third-party
verification of family annual income, the value of assets, expenses related to deductions
from annual income and other factors that affect the determination of adjusted income
(§§ 5.659(d), 960.259(c), 982.516(a)(2)).
Through this notice, HUD is aligning the timeframes within which documentation must
be dated and the breadth of documentation required to verify tenant bank accounts and
employment income across PIH and MFH programs. Consistency among HUD’s
programs will reduce burden among tenants who move from one program to another and
among entities that administer multiple HUD programs.
4. NOTICE APPLICABILITY
HOTMA updates and creates new rules for programs administered by the Office of
Public and Indian Housing (PIH) (HCV [including Project-Based Vouchers], Moderate
Rehabilitation, Moderate Rehabilitation SRO, Public Housing), and programs
administered by the Office of Multifamily Housing (MFH) (Section 8 PBRA, 202/8,
202/162 PAC, 202/811 PRAC, 236 IRP, 811 PRA, SPRAC). HUD’s revisions to the Part
5 income regulations also affect certain programs administered by the Office of
Community Planning and Development (CPD).5 HUD reminds PHAs/MFH Owners that
5
CPD will issue separate guidance on how HOTMA impacts its programs.
6
they are required to meet all program requirements on rental units assisted and/or
developed by multiple HUD programs.
This notice applies only to the following programs:
Housing Choice Voucher (HCV);
Public Housing;
Section 8 Moderate Rehabilitation (Mod Rehab);
Section 8 Moderate Rehabilitation Single Room Occupancy (SRO);
Section 8 Project-Based Rental Assistance (PBRA);
Section 202/8 (202/8);
Section 202/162 Project Assistance Contract (202/162 PAC);
Section 202/811 Capital Advance with Project Rental Assistance Contracts (202/811
PRAC);
Non-insured 236 projects with Interest Reduction Payments (236 IRP) or active 236
IRP Use Agreement;
Section 811 Project Rental Assistance (811 PRA); and
Senior Preservation Rental Assistance Contracts (SPRAC).
The contents of this notice apply to PHAs participating in the MTW program except
where an approved MTW waiver is in place. For example, MTW PHAs that have
previously developed a different method of measuring prior-year income as part of the
Rent Reform Demonstration or Stepped and Tiered Rent Demonstration may continue to
use those methods after this notice takes effect. References to form HUD–50058 in this
notice take on the meaning of form HUD–50058 MTW for MTW PHAs and form HUD–
50058 MTW Expansion for MTW Expansion PHAs.
5. STRUCTURE OF THIS PUBLICATION
This notice is organized by distinct topic areas to assist PHAs/MFH Owners in
identifying programmatic changes that affect their operations. Each topic area is
presented as an attachment to the notice. Each attachment follows a uniform structure:
Regulation(s)
Affected Program(s)
Summary of Change(s)
Subtopics
Within each topic area, and in some cases within subtopic areas, the notice indicates
whether PHAs/MFH Owners have discretion in establishing policies within their
individual programs.
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6. EFFECTIVE DATE, COMPLIANCE, AND UPDATES TO PHA/MFH OWNER POLICIES
The final rule’s effective date is January 1, 2024. HUD recognizes, however, that
HOTMA includes significant program and systems changes and that PHAs/MFH Owners
and families need time to understand the changes and implement them. HUD understands
that the system development timeframes for the Housing Information Portal (HIP) and
Tenant Rental Assistance Certification System (TRACS) make full implementation and
compliance with the final rule by the January 1, 2024, deadline unlikely. Additionally,
because these HOTMA changes apply to all current participants and new admissions,
implementation of the HOTMA final rule cannot be achieved immediately on a universal
basis but rather is an ongoing process that will happen over the course of a year as routine
program activities occur. Subparagraphs 6.1 and 6.2 describe HUD’s implementation
requirements by program office.
6.1 Compliance Date and Required Actions for PHAs (Office of Public and Indian
Housing)
PHAs should consult Notice PIH 2024-38 for guidance on HUD’s enforcement of PHA
compliance with Sections 102 and 104 of HOTMA.
6.2 Compliance Date and Required Actions for MFH Owners (Office of Multifamily
Housing)
By May 31, 2024:
By May 31, 2024, MFH Owners must update their Tenant Selection Plans and EIV
policies and procedures to reflect HOTMA rules and discretionary policies.
MFH Owners must make the revised Tenant Selection Plan publicly available.
Note: MFH Owners must continue to follow their existing Tenant Selection Plans and
EIV policies & procedures until the MFH Owner’s software is compliant with TRACS
203A.
What MFH Owners must do once their software is HOTMA compliant:
Once a MFH Owner’s software is HOTMA compliant (i.e., TRACS 203A system
requirements have been fully implemented), the following things must happen:
MFH Owners must provide tenants at least 60 days’ notice that their lease will be
modified at the end of the lease term after the expiration of the 60 days’ notice. Once
proper notice is given, MFH Owners must begin using the revised Model Leases at
the expiration of a family’s lease term.
MFH Owners must implement their revised Tenant Selection Plans and EIV policies
and procedures.
All tenant data submissions must comply with the HOTMA regulations. Prior to their
first reexaminations under HOTMA, MFH Owners must inform families that their
income determinations will be conducted in accordance with the HOTMA final rule.
As a best practice, HUD recommends that MFH Owners describe to families how
their income determinations will change with the implementation of the final rule.
8
MFH Owners must use the revised Tenant Consent form (form HUD–9887/9887A)
and Fact Sheets (“How Your Rent is Determined”).
How HUD will monitor MFH Owner compliance prior to January 1, 2027:
Prior to January 1, 2027, MFH Owners will not be penalized for HOTMA-related tenant
file errors during Management and Occupancy Reviews (MORs). Instead, the Contract
Administrator will issue observations with corrective actions.
By January 1, 2027:
Full compliance with the HOTMA final rule is mandatory effective January 1, 2027.
How HUD will monitor owner compliance on or after January 1, 2027:
Contractor Administrators will issue HOTMA-related findings during MORs.
MFH Owners must correct all HOTMA-related observations that were issued by
Contract Administrators prior to January 1, 2027.
MFH Owners who fail to implement HOTMA may be found in default of their
business agreements with HUD.
Questions about compliance should be directed to MFH_HOTMA@hud.gov.
MFH Model Leases
MFH is updating the three program Model Leases to conform to the requirements in the
HOTMA final rule. MFH Owners must begin using the new HUD-approved leases once
HOTMA is fully implemented at the property.
The following information outlines the process that MFH Owners must follow to renew
families under the applicable revised Model Lease:
Any modification to the lease may be effective only at the end of a lease term for
all MFH programs. Lease terms are currently listed in paragraph 2 in form HUD–
90105–A (Section 8 Model Lease); paragraphs 1 and 9 in form HUD–90105–B
(202/8 Model Lease); paragraphs 1 and 8 in form HUD–90105–C (202 PRAC Model
Lease); paragraphs 1 and 8 in form HUD–90105–D (811 PRAC Model Lease); and
paragraphs 1 and 8 in form HUD–92236 (811 PRA Model Lease).
MFH Owners must provide families with copies of the new HUD-approved lease at
least 60 days prior to the end of a family’s lease term.
MFH Owners must include a letter clearly stating that the family can either accept the
modification or move, but that a response is due from the family within 30 days.
Families must either accept the modification by signing both copies of the
modification and returning one to the MFH Owner6 or refuse the modification and
give the owner a 30-day notice of intent to vacate.
6
Electronic signature is acceptable pursuant to Notice H 2020–10, except where not permitted by state and/or local
laws.
9
If, within 30 days, the family indicates that the modification is unacceptable or does
not respond, the MFH Owner may begin the procedures for terminating tenancy.
The lease modification notice must be served to families in the following manner7:
1) The MFH Owner must send a letter by first-class mail, properly stamped, and
addressed and including a return address, to the family at the unit address; and
2) The MFH Owner must deliver a copy of the notice to any adult person answering
the door at the unit. If no adult answers the door, the person serving the notice
may place it under or through the door or affix it to the door.
The date on which the notice is deemed received by the family is the later of:
1) The date the first-class letter is mailed; or
2) The date the notice is properly given.
Service of the notice is deemed effective once the notice has been both mailed and hand-
delivered. MFH Owners are not permitted to deliver lease modification notices to
families electronically.
Families who are under old leases after the MFH Owner becomes compliant with
HOTMA must continue to report income and household composition changes between
annual reexaminations in accordance with their existing leases until they sign a revised
lease. MFH Owners will be required to determine whether changes reported by families
under the old lease will require an interim reexamination consistent with HOTMA’s
requirements. Since the remaining provisions reflect changes to existing regulatory
provisions during the period of an existing lease, all other HOTMA final rule provisions
can be implemented without the family’s execution of a revised lease.
No other modifications may be made to the Model Leases without HUD’s approval.
MFH Owners may incorporate existing HUD-approved lease addenda into the revised
Model Leases if the addenda do not conflict with the requirements of the final rule.
7. SUPERSEDED AND RESCINDED NOTICES
7.1 Guidebooks and Handbooks
This notice supersedes relevant portions of HUD’s guidance as provided in the
HCV Guidebook, the Public Housing Occupancy Program Guidebook, and the
HUD Handbook 4350.3: Occupancy Requirements of Subsidized Multifamily
Housing Programs. HUD will update and replace all the sections and chapters
listed below. Before consulting one of these resources, please ensure you are
using a version dated after the publication date of this notice. Questions regarding
the relevancy of existing handbook/guidebook guidance should be directed to the
HOTMA mailbox maintained by each program office.
HCV Guidebook chapters to be updated:
Eligibility Determination and Denial of Assistance
7
24 CFR § 247.4(b), as applicable to 24 §§ CFR 891.430(b), 891.630(b), and 891.770(b).
10
Reexaminations
Public Housing Occupancy Guidebook chapters to be updated:
Eligibility Determination and Denial of Assistance
Income Determination
Reexaminations
HUD Handbook 4350.3: Occupancy Requirements of Subsidized Multifamily
Housing Programs chapters to be updated:
Chapter 3. Eligibility for Assistance and Occupancy
Chapter 4. Waiting List and Tenant Selection
Chapter 5. Determining Income and Calculating Rent
Chapter 7. Recertification, Unit Transfers, and Gross Rent Changes
Chapter 9: Enterprise Income Verification (EIV)
Glossary
7.2 Housing and PIH Notices
This notice supersedes and replaces the guidance provided in the following
program notices:
Exclusion from Annual Income of Temporary Employment from the U.S.
Census Bureau (H 2020–06)
Administrative Guidance for Effective and Mandated Use of the Enterprise
Income Verification (EIV) System (PIH 2018–18)
Income Exclusion Under Temporary Census Employment and Census Access
(PIH 2017–05)
Passbook Savings Rate Effective February 1, 2016 (H 2016–01)
Amendment to the Definition of Tuition (PIH 2015–21/H 2015–12)
Guidance on Verification of Excluded Income (PIH 2013–04 (HA))
Establishing the Passbook Savings Rate (PIH 2012–29)
Housing Choice Voucher – Homeownership Option 10 Year Asset Exclusion
(PIH 2012–03)
Income Exclusion of Kinship, Kin-GAP and Other Guardianship Care
Payments (PIH 2012–01 (HA))
Streamlining Administrative Practices in the Housing Choice Voucher program
(Notice PIH 2012–15) is still useful for PHAs who are streamlining their
programs. Numerous provisions in that notice are no longer applicable or
additional flexibilities have been offered through more recent PIH notices. As it
relates to the HOTMA final rule, however, the notice includes numerous
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recommendations surrounding interim reexaminations and annual reexaminations
that are no longer applicable. Therefore, HUD is rescinding PIH Notice 2012–15.
The following sections of Streamlining Program Regulations for Programs
Administered by Public Housing Agencies (Notice PIH 2016–05) are rescinded:
C: “Exclusion of mandatory education fees from income”
E: “Earned income disregard”
F: “Family declaration of assets under $5,000”
N: “Family income and composition: regular and interim examinations”
Verification of Social Security Numbers (SSNs), Social Security (SS) and
Supplemental Security Income (SSI) Benefits; and Effective Use of the Enterprise
Income Verification (EIV) System’s Identity Verification Report (Notice PIH
2018–24) contains useful guidance but several provisions are no longer applicable
or additional flexibilities have been offered. Therefore, HUD is partially
rescinding Notice PIH 2018-24:
The details of what constitutes acceptable documentation of SSN in
section 6 is supplemented by section J.6 of Notice PIH 2023-27.
References in sections 15, 16, and 17 to the date of documents used for
written third-party verification are amended, given the change in section
J.5 of Notice PIH 2023-27 to allow written third-party documents dated
within 120 days. Likewise, for documentation requirements related to
benefit income, section J.4 on “Safe Harbor” income determination must
be taken into consideration.
References to the requirement to run EIV at all mandatory interim
reexaminations are superseded by section J.3 of Notice PIH 2023-27.
Discussion of the application of the SSA COLA in section 20 is
superseded by section B.3 of Notice PIH 2023-27.
Readers should regularly consult https://ssa.gov for updates to instructions
on how to request benefit letters.
The following Housing notices are partially rescinded by this notice:
Streamlining Administrative Regulations for Multifamily Housing Programs
(H 2016–09)
“24 CFR 5.216 – Verification of Social Security Numbers” (Section IV).
This section of the notice states that an interim reexamination is required
to add or update a household member’s Social Security Number (SSN).
“24 CFR 5.609 – Definition Change – Exclusion of mandatory education
fees from income” (Section VI). This section of the notice references the
outdated income exclusion in 24 CFR § 5.609(b)(9).
Section 811 Project Rental Assistance (PRA) Occupancy Interim Notice (H
2013–24)
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“Annual Recertification” (Section IV.F). This section of the notice states
that MFH Owners must conduct interim reexaminations as described in
HUD Handbook 4350.3 REV-1, Chapter 7.
Enterprise Income Verification (EIV) System (H 2013–06)
“Using EIV Reports” (Section VII). This section of the notice states that
MFH Owners are required to use EIV Income Reports as a third-party
source to verify a tenant’s employment and income information during
interim reexaminations.
“Use of EIV Reports” (Attachment 6). This attachment to the notice states
that the use of EIV Reports (Income Report, Income Discrepancy Report,
and Summary Report) is mandatory at interim reexaminations.
8. PAPERWORK REDUCTION ACT
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520), an
agency may not conduct or sponsor, and a person is not required to respond to, a
collection of information, unless the collection displays a currently valid OMB control
number. The information collection requirements of this notice were assigned OMB
Control Numbers 2577–0169, 2577–0295, 2577–0083, 2502–0204, 2577–0226, 2577–
0282.
For questions regarding this notice please contact MFH_HOTMA@hud.gov for
Multifamily Housing program questions or HOTMAQuestions@hud.gov for PIH
program questions.
Joseph M. Gormley Benjamin Hobbs
Performing the Delegable Duties of Assistant Secretary
the Assistant Secretary for Housing – for Public and Indian Housing
Federal Housing Commissioner
13
TABLE OF CONTENTS
Attachment A: Topic: Asset Limitation........................................................................................ 15
Attachment B: Topic: Calculating Income ................................................................................... 26
Attachment C: Topic: Deductions and Expenses.......................................................................... 36
Attachment D: Topic: Applicable Fair Housing and Civil Rights Requirements ........................ 50
Attachment E: Topic: Household Composition ............................................................................ 52
Attachment F: Topic: Income ....................................................................................................... 55
Attachment G: Topic: Income Exclusions .................................................................................... 75
Attachment H: Topic: Inflationary Adjustments .......................................................................... 95
Attachment I: Topic: Interim Reexaminations ............................................................................. 98
Attachment J: Topic: Verification .............................................................................................. 112
14
ATTACHMENT A: TOPIC: ASSET LIMITATION
Regulations
24 CFR §§ 5.100 (real property); 5.603; and 5.618
Applicable Programs
HUD Multifamily Housing HUD Multifamily Housing Public and Indian Housing
Section 8 (Project Based Rental Section 202/162 PAC, Section HCV (including Project-Based
Assistance), Section 202/8 202/811 PRAC, Section 236 IRP, vouchers), Public Housing, Section
Section 811 PRA, SPRAC 8 Moderate Rehabilitation, Section
8 Moderate Rehabilitation SRO
Yes No Yes
Summary
For the Public Housing and Section 8 programs (including PBRA and HCV), PHAs/MFH
Owners must deny admission of an applicant if they are determined to not meet the requirements
of the asset limitation (see paragraph A.1 and A.2 below).
PHAs/MFH Owners have discretion with respect to application of the asset limitation at annual
and interim reexamination, as discussed in paragraph A.3 below. For the purpose of
reexaminations, paragraph A.1 does not apply to PHAs/MFH Owners who establish total non-
enforcement policies as described in paragraph A.3.a of this attachment.
Subtopics
A.1 Asset Limitation
This section describes the asset limitation. The enforcement options are described in
subsequent paragraphs A.2. and A.3. A family is out of compliance with the asset
limitation if they have either of the following:
Net family assets that exceed $100,000, as adjusted annually for inflation. See
Attachment F (paragraph F.4.a) (Determining Net Family Assets) of this notice for
the definition of net family assets. HUD will adjust this amount annually in
accordance with the Consumer Price Index–Urban Wage Earners and Clerical
Workers (CPI–W). See Attachment H (Inflationary Adjustments) of this notice for
more information on inflationary adjustments. In determining whether the net family
assets for a family exceed $100,000 (as adjusted for inflation), a PHA/MFH Owner
may accept a declaration from the family that their net assets do not exceed $50,000
(as adjusted for inflation), without needing to further verify that declaration. See
Attachment F (paragraph F.7) (Self-Certification of Net Family Assets Equal to or
Less Than $50,000 (as adjusted by inflation)) of this notice. For assets disposed of for
less than fair market value during the two years preceding the date of application for
the program or reexamination, as applicable, the difference in value between the
consideration received and the fair market value must be included in net family
assets.
15
Real property that is suitable for occupancy. Real property means “real property as
provided under the State law in which the property is located.”A1 Families are out of
compliance if they have a present ownership interest in, a legal right to reside in, and
the effective legal authority to sell a property (based on laws of the state or locality in
which the property is located) that is suitable for occupancy by the family as a
residence. However, there are several exemptions to the real property restriction,
discussed below in paragraph A.4.a (Exemptions to the Real Property Restriction in
the Asset Limitation). In determining whether the family owns real property that
would make them out of compliance, a PHA/MFH Owner may rely upon a self-
certification, both at the time of admission and at reexamination, from the family
stating that they do not have any present ownership interest in any real property. A
PHA/MFH Owner could use a form that requests certification of the family’s present
ownership interest in the property, and also inquire about the family’s legal right to
reside in, and the effective legal authority to sell any real property that is suitable for
occupancy by the family. If the family certifies that they do not have any present
ownership interest in real property, the PHA/MFH Owner may take that as sufficient
to determine the family is not out of compliance with the real property restriction.
However, if the family owns real property, the PHA/MFH Owner must seek third-
party verification of the family’s legal right to reside in the property, the effective
legal authority to sell the property, and whether the property is suitable for occupancy
by the family as a residence.
Note: Ownership of real property is relevant to the asset limitation in two distinct ways:
1) if the family has an ownership interest in real property, that interest may cause the
family’s net family assets to exceed $100,000 (adjusted for inflation), in which case the
family is out of compliance; and 2) if the family has a present ownership interest in, a
legal right to reside in, and the effective legal authority to sell a property that is suitable
for occupancy by the family as a residence, then the family is out of compliance. There
are several exemptions to the real property restriction at § 5.618(a)(1)(ii), discussed in
paragraph A.4.a, which identify when a real property ownership interest does not by itself
render the family out of compliance with the asset limitation. However, those exemptions
do not indicate that such real property is excluded from the calculation of net family
assets. Unless the real property is specifically excluded from net family assets in the
definition under § 5.603, it may be included in net family assets. If the value of that real
property brings the net family assets above $100,000 (as adjusted for inflation), the
family will be out of compliance.
A.2 Compliance at Admission
At admission, ownership of net family assets that exceed $100,000 (as adjusted) or
ownership of disqualifying real property require denial of assistance. PHAs/MFH Owners
do not have the discretion to not enforce or provide limited enforcement of the asset
limitation at admission.
With respect to MFH programs only, MFH Owners must enforce the asset limitation at
initial certification for families who lost their assistance because they failed to recertify
A1
Real Property as defined in 24 CFR § 5.100.
16
timely or began to pay market rent, remained in the unit, and then lost income, once again
requiring assistance.
Note: Families residing in units converting to Section 8 PBRA or PBV through the
Rental Assistance Demonstration (RAD) may not be rescreened upon conversion
pursuant to the RAD statute; therefore, RAD families converting to PBRA or PBV are
not subject to the asset limitation provision at conversion. Instead, families residing in
units converting under the First or Second Component of RAD to PBRA (including units
originally assisted under the Section 202/811 PRAC program) or PBV will be subject to
the PHA/MFH Owner’s discretionary asset limitation policies at their next annual or
interim reexamination after conversion, whichever is sooner.
A.3 PHA/MFH Owner Discretion at Annual and Interim Reexamination
PHAs/MFH Owners have discretion with respect to the application of the asset limitation
at annual and interim reexamination. PHAs/MFH Owners may adopt a written policy of
total non-enforcement, enforcement, or limited enforcement, as described below. They
may also adopt exception policies as described in A.3.d.
Regardless of the policy they adopt, PHAs/MFH Owners must comply with federal fair
housing and civil rights requirements, including reasonable accommodation
requirements. This obligation applies regardless of whether PHAs/MFH Owners establish
enforcement, limited enforcement, or exception policies to the asset limitation at
reexamination. This may mean, for example, that a PHA/MFH Owner would be required
to allow someone to cure their noncompliance or provide more time to demonstrate they
have cured their noncompliance before terminating assistance if there was a nexus
between the person’s disability and their need to cure or their need for additional time to
demonstrate they have cured their noncompliance. A reasonable accommodation could
require delaying the initiation of termination or eviction proceedings for more than six
months.
A.3.a Total Non-Enforcement
At annual and interim reexamination, PHAs/MFH Owners may choose not to
enforce the asset limitation, if they establish a written non-enforcement policy.
PHAs/MFH Owners may establish a total non-enforcement policy for all families
at reexaminations, which would mean that they will not initiate termination or
eviction proceedings for a family for non-compliance with the asset limitation.
Where the PHA/MFH Owner exercises this discretion to allow families who
would otherwise fail to comply with the asset limitation to continue renting their
units, the families will continue to receive assistance. If they adopt a total non-
enforcement policy, PHAs/MFH Owners must apply the non-enforcement policy
the same for all families within a program (e.g., if adopted in a PHA’s
Admissions and Continued Occupancy Policy, it must apply to all Public Housing
families). Any non-enforcement policy must be included in the PHA’s
Administrative Plan or ACOP or a MFH Owner’s Tenant Selection Plan.
Note: PHAs/MFH Owners who adopt a total non-enforcement policy are still
required to calculate net family assets in the manner required by § 5.603, as part
of the process of calculating annual income in accordance with § 5.609. In the
17
course of calculating net family assets, PHAs/MFH Owners thus still need to
determine whether the family owns real property that must be included in net
family assets. However, if they adopt a total non-enforcement policy, they are not
required to obtain and verify additional information about owned real property
strictly to determine whether it qualifies for an exemption under § 5.618 (e.g.,
whether owned real property is suitable for occupancy). For example, if a
PHA/MFH Owner finds a family owns real property, that real property would
need to be included in the calculation of net family assets unless it is specifically
excluded by § 5.603, but the PHA/MFH Owner would not need to inquire whether
it was suitable for occupancy.
A.3.b Enforcement
PHAs/MFH Owners may choose to enforce the asset limitation at reexamination.
PHAs/MFH Owners with an enforcement policy at reexamination must initiate
termination or eviction proceedings within six months of the income examination
that determined the family was out of compliance. They may delay the initiation
of termination or eviction proceedings for noncompliant families for up to but no
longer than six months. See paragraph A.4 on the features that determine whether
owned real property renders the family out of compliance with the asset
limitation. See paragraph A.5 on how requirements to initiate termination or
eviction proceedings vary by program.
Any enforcement policy, including the amount of time that a PHA/MFH Owner
will delay the initiation of termination or eviction proceedings for noncompliant
families, must be included in the PHA’s Administrative Plan or ACOP or a MFH
Owner’s Tenant Selection Plan.
A.3.c Limited Enforcement: Option to Cure
PHA/MFH Owners may alternatively adopt a written policy of limited
enforcement, which would differ from total enforcement of the asset limitation at
reexamination in only one regard: all families who are found to be out of
compliance at reexamination would be provided the same opportunity to come
back into compliance. Families would have up to but no longer than six months,
depending on the limited enforcement policy that the PHA/MFH Owner adopts, to
demonstrate that they have come back into compliance. If the family does
demonstrate they have come back into compliance within that period, the
PHA/MFH Owner would not initiate termination or eviction proceedings.
Limited enforcement policies cannot provide families more than six months to
come back into compliance and do not extend the period of time the PHA/MFH
Owner may delay initiation of termination or eviction proceedings; the PHA/MFH
Owner may still only delay initiation of termination or eviction proceedings for
the family for a period of not more than six months. (In the case of a reasonable
accommodation, a family may be afforded more than six months to comply.) See
paragraph A.4 on the features that determine whether owned real property renders
the family out of compliance with the asset limitation.
18
If the PHA/MFH Owner has adopted a limited enforcement policy, that policy
must address the timeframe for curing non-compliance (e.g., families will have
six months to demonstrate they have cured non-compliance with the asset
limitation). In establishing a limited enforcement policy, PHAs/MFH Owners
may choose to allow an opportunity to cure non-compliance that is less than six
months. Any limited enforcement policy, including the amount of time that a
PHA/MFH Owner will delay the initiation of termination or eviction proceedings
for families who do not demonstrate compliance, must be included in the PHA’s
Administrative Plan or ACOP or a MFH Owner’s Tenant Selection Plan.
What families must do to cure non-compliance depends on why they were
identified as out of compliance. Families could cure non-compliance by removing
prohibited assets — for example, by selling real property or bringing net family
assets below $100,000 (as adjusted for inflation). However, the value of assets
disposed of for less than fair market value would still be counted in the family’s
net family asset total in the two years preceding the date of application for the
program or reexamination. See Attachment F (paragraph F.4.a) for a discussion of
what constitutes a disposition of assets for less than fair market value.
If the family is non-compliant with the asset limitation because of a present
ownership interest in real property, but their net family assets do not exceed
$100,000 (adjusted for inflation), they can cure non-compliance by demonstrating
that either they no longer own the prohibited asset or that it now qualifies for an
exemption (e.g., because the family is now offering it for sale), so long as the
family’s net family assets do not exceed $100,000 (adjusted for inflation) after
such action is taken. (Note, however, that offering real property for sale does not
thereby exclude the real property from the calculation of net family assets.)
A family with more than $100,000 (as adjusted annually for inflation) in net
family assets may bring their assets below the threshold in several ways. The
family could purchase something that is not counted among net family assets,
such as necessary personal property (e.g., a car used for everyday transportation).
Alternatively, the family may cure non-compliance by moving assets such that
they are no longer counted among net family assets, so long as doing so is not
counted as disposing of assets for less than fair market value. In some
circumstances, the family may transfer funds into a retirement plan recognized as
such by the Internal Revenue Service (e.g., an individual retirement arrangement,
employer retirement plan, or retirement plan for self-employed individuals), if the
account is held by a member of the family. An asset moved to a retirement
account held by a member of the family is not considered an asset disposed of for
less than fair market value. Likewise, the family may be able to move funds into
an irrevocable trust for the benefit of someone in the assisted family.
When PHAs/MFH Owners have a limited enforcement policy and the family
demonstrates they have cured non-compliance, PHAs/MFH Owners must record
the curing of a family’s ineligibility in the family’s file and permit families to
remain in the program. The related updates to the family’s income and assets
would be processed at the next reexamination, which may be an interim if the
family’s circumstances meet the threshold for processing such a reexamination, or
19
it may be the next annual reexamination. See Attachment I (Interim
Reexaminations) of this notice.
A.3.d Exception Policies
At annual and interim reexamination, PHAs/MFH Owners may also establish
exceptions to the asset limitation (not at admission or initial certification where
the family is being rescreened for assistance). If the PHA/MFH Owner has
adopted a written exception policy for reexaminations, then families in the
specified exception categories will receive either total non-enforcement or limited
enforcement, depending on the exception policy the PHA/MFH Owner has
adopted. Families in the specified exception categories would either (a) not be
subject to termination or eviction proceedings due to non-compliance with the
asset limitation at a reexamination, or (b) they would be provided an opportunity,
up to but no longer than six months, to come back into compliance, after which
point the asset limitation would be enforced. An exception policy may be
combined with a limited enforcement policy for all other families not in the
exception categories, as described below.
PHAs/MFH Owners are permitted to include more than one exception as part of
any exception policy. Exception policies may be based on family type and may
take into consideration such factors as age, disability, income, the ability of the
family to find suitable alternative housing, and whether supportive services are
being providedA2. All exception policies must comply with civil rights and fair
housing statutes and requirements, including but not limited to requirements
identified in 24 CFR § 5.105(a).
Limited exception policies, which establish an opportunity to cure non-
compliance, cannot provide families more than six months to cure these
conditions. (In the case of a reasonable accommodation, a family may be afforded
more than six months to comply.) If they have adopted such a policy, PHAs/MFH
Owners must initiate termination or eviction proceedings for families who remain
in non-compliance with the asset limitation within six months of the
reexamination at which the non-compliance was determined. In establishing a
limited exception policy, PHAs/MFH Owners may choose a period of delay that
is less than six months.
PHAs/MFH Owners may choose to combine a limited enforcement policy (which
applies to all families) with an exception policy for families in the specified
exception categories. For example, they may adopt a limited enforcement policy
that provides all families a window of six months to cure non-compliance with the
asset limitation, and they may simultaneously adopt an exception policy that
provides that the asset limitation will not be enforced at all at annual and interim
reexaminations for families in the exception categories. PHAs/MFH Owners
could alternatively adopt a limited enforcement policy for all families that
provides a window of less than six months to cure non-compliance, alongside a
A2
Sec. 104(e)(5) of P.L.114-201 (HOTMA).
20
limited exception policy that allows families in the exception categories a longer
period of time (up to but no longer than six months) to cure non-compliance.
Any exception policy must be included in the PHA’s Administrative Plan or
ACOP or a MFH Owner’s Tenant Selection Plan. The exception policy must
describe whether excepted families are subject to total non-enforcement or limited
enforcement.
Example A1: Asset Limitation Exception Policies
Sample Policy A: For all families that meet the definition of extremely low–income at
reexamination and are found to be non-compliant with the asset limitation, the
PHA/MFH Owner will not enforce the asset limitation at reexamination. Such families
will not be subject to termination or eviction proceedings due to non-compliance with the
asset limitation at reexamination. All other families will be subject to a limited
enforcement policy and provided six months to cure noncompliance.
Sample Policy B: For all families that meet the definition of extremely low–income at
reexamination and are found to be non-compliant with the asset limitation, the
PHA/MFH Owner will not enforce the asset limitation at reexamination. Such families
will not be subject to termination or eviction proceedings due to non-compliance with the
asset limitation at reexamination. All other families will be subject to the enforcement
policy.
Sample Policy C: Families with an elderly family member or a member with a disability
will be given six months to cure their non-compliance with the asset limitation, as stated
in the PHA/MFH Owner’s policies. All other families will be subject to a limited
enforcement policy and provided four months to cure noncompliance.
Sample Policy D: Families with an elderly family member or a member with a disability
will be given six months to cure their non-compliance with the asset limitation, as stated
in the PHA/MFH Owner’s policies. All other families will be subject to the enforcement
policy.
A.4 Real Property Determination
At admission and at reexamination, if the PHA/MFH Owner is enforcing the asset
limitation, including limited enforcement, and a family declares that they have a present
ownership interest in real property, then the PHA/MFH Owner must determine whether
the property qualifies for an exemption as described in paragraph A.4.a (Exemptions to
the Real Property Restriction in the Asset Limitation), whether the family lacks a legal
right to reside in the real property as described in paragraph A.4.b (Legal Right to Reside
in the Real Property), whether they lack the effective legal authority to sell the real
property as described in paragraph A.4.c (Effective Legal Authority to Sell the Real
Property), or whether the real property is unsuitable for occupancy as described in
paragraph A.4.d (Suitability of Real Property for Occupancy). If the PHA/MFH Owner
finds that any of these four things are true, then the family’s present ownership interest in
real property does not itself mean the family is out of compliance with the asset
limitation. The type of third-party documentation that will be used to verify the
disposition of a family’s real property may vary by a family’s circumstances and the
locality in which the real property is located.
21
A.4.a Exemptions to the Real Property Restriction in the Asset Limitation
The real property restriction does not apply to the following:
Any property for which the family is receiving assistance under 24 CFR
§ 982.620 (i.e., a manufactured home owned by a family who receives
assistance to lease the space or lot in which it is located). Likewise, any
property for which the family is receiving assistance under the
Homeownership Option in 24 CFR Part 982. See 24 CFR § 5.618(a)(1)(ii)(A).
Any property jointly owned by a family member and another individual who
does not live with the family but who resides at the jointly owned property.
See 24 CFR § 5.618(a)(1)(ii)(B).
Any property owned by a family that includes a person who is a victim of
domestic violence, dating violence, sexual assault, or stalking, as those terms
are defined in 24 CFR Part 5 (Subpart L). For example, if the victim is a
minor, the real property limitation does not apply to any property owned by
the victim’s parent or guardian. When a family requests an exemption from
the real property limitation on this basis, the PHA/MFH Owner must accept
self-certification and follow the confidentiality and documentation-request
requirements established at 24 CFR § 5.2007. See 24 CFR
§ 5.618(a)(1)(ii)(C).
Any property that the family is offering for sale. Documentary evidence of the
sales process could include, for example, a contract with a real estate agent or
a current real estate listing. See 24 CFR § 5.618(a)(1)(ii)(D).
A.4.b Legal Right to Reside in the Real Property
The real property restriction applies only when the family has the legal right to
reside in the real property. Whether a family has the legal right to reside in a
property may be dependent on state and local law. The family may own real
property that legally they may not reside in. For example, the family may own a
commercial property, such as a convenience store or other retail establishment,
which cannot be occupied as a place of residence by the family. Families who
claim they lack the legal right to reside in the real property must provide evidence
to support their claim(s). What constitutes sufficient evidence will vary by
circumstance.
A.4.c Effective Legal Authority to Sell the Real Property
The real property restriction applies only when the family has the effective legal
authority to sell the real property, based on the laws of the state or locality in
which the property is located. There may be multiple reasons why a family does
not have such legal authority. For example, when families are contesting
ownership of a property in court, or an individual is in divorce proceedings, they
may be unable to sell the property until the completion of those proceedings.
Someone who owns heirs’ property may not have the authority to sell until others’
claims to fractional ownership have been settled. Families who claim they lack
the legal authority to sell the real property must provide evidence to support their
22
claim(s). What constitutes sufficient evidence will vary by circumstance. For
example, a divorce pleading or complaint may demonstrate that there are actual
divorce proceedings occurring.
A.4.d Suitability of Real Property for Occupancy
A property will be considered suitable for occupancy unless the family
demonstrates that the real property meets one of the following five conditions (24
CFR § 5.618(a)(2)):
The property is not capable of meeting the disability-related needs of all
members of the family (e.g., does not meet physical accessibility
requirements, family has disability-related need for additional bedrooms,
family needs proximity to accessible transportation). Documentary
requirements to establish disability-related needs must comply with applicable
fair housing and civil rights requirements.
The property is not sufficient for the size of the family. A PHA/MFH Owner’s
occupancy standards may be used for such a determination.
The property is geographically located so that it creates a hardship for the
family (e.g., the distance or commuting time between the property and the
family’s place of work or school would place a hardship on the family, as
determined by the PHA/MFH Owner. Distance or commute time to
school/work are illustrative, but not exhaustive, examples of geographic
hardships). Through written policies, PHAs/MFH Owners may set parameters
on what constitutes such a hardship, but they must consider the specific
circumstances of the family, including information provided by the family, in
making a determination.
The property is not safe to reside in because of its physical condition (e.g., the
property’s physical condition poses a risk to the family’s health and safety and
the condition of the property cannot be easily remedied). Unsafe property
conditions could include external circumstances or environmental factors
outside the control of the family. The property may be deemed not suitable for
occupancy if the alterations that would be needed to make it safe to live in are
cost prohibitive.
The family does not have the legal right to reside in the property.
A.5 Special Considerations for Terminating Assistance or Evicting Families for Non-
Compliance with the Asset Limitation
Even if PHAs/MFH Owners do not adopt a non-enforcement or limited enforcement
policy and/or exception policy, they may delay for a period of up to six months the
initiation of termination or eviction of assistance proceedings. They are not required to
initiate termination or eviction of assistance proceedings immediately upon determining
the family is out of compliance with the asset limitation, nor are they required to begin
the proceedings during the six-month period in order to have a termination of assistance
or eviction completed at the six-month mark. PHAs/MFH Owners are encouraged to set
23
policies for the initiation of termination or eviction of assistance proceedings that provide
families adequate opportunity to find new housing.
What it means to initiate termination or eviction of assistance proceedings due to non-
compliance with the asset limitation will vary by program:
In the Section 8 Project-Based Rental Assistance program, including the Section
202/8 program, participants who are not compliant with the asset limitation must
either pay the contract rent for the unit or vacate the unit after termination of
assistance.
In the Housing Choice Voucher program, participants who are not compliant with the
asset limitation are subject to termination of assistance, but there is no requirement
that the unit owner initiate eviction because of non-compliance with the asset
limitation.
In the Public Housing program, participants who are not compliant with the asset
limitation are subject to termination of assistance and eviction from the unit, if they
fail to vacate the unit voluntarily. There is no general provision that allows such
families to remain and pay an alternative rent.
In the Section 8 Project-Based Voucher program, participants who are not compliant
with the asset limitation are subject to termination of assistance. The PHA and owner
may agree to remove the unit from the HAP contract, at which point the unit becomes
an unassisted unit, and the owner may choose to allow the family to stay and pay the
market rent. (The owner may charge the family a rent that is below-market rate, in
which case it would be considered a landlord-assisted unit for rent reasonableness
purposes.) When the family subsequently vacates the unit, the unit may be added
back to the HAP contract. If the project is partially assisted, the PHA and owner may
substitute a different unit for the unit removed due to the ineligibility of the tenant,
consistent with the requirements for adding units to the HAP contract. Alternatively,
if the owner refuses to agree to remove the unit from the HAP contract, the owner
must evict the family, if they fail to vacate the unit voluntarily. In this case, the owner
may not enter into a new lease with the now-ineligible family for that PBV-assisted
unit, and the PBV unit must be leased to an eligible family.
In the Section 8 Moderate Rehabilitation program, participants who are not compliant
with the asset limitation are no longer eligible for assistance. 24 CFR § 882.512
expressly allows that families who were eligible at admission but subsequently
become ineligible may remain in HAP contract units. However, if the owner fails to
have at least 90 percent of the assisted units leased or available for leasing by eligible
families, the PHA may reduce the number of units covered by the HAP contract. The
PHA will agree to an amendment of the HAP contract to provide for subsequent
restoration of any reduction in units if the PHA determines that the restoration is
justified by demand, the owner otherwise has a record of compliance with obligations
under the HAP contract, and contract authority is available.
PHAs/MFH Owners must follow program procedures for terminating assistance or
tenancy. For example, for Public Housing families, when the PHA initiates the eviction
and termination process, the PHA must provide a lease termination notice of 30 days
24
unless a state or local law requires a longer notice period, and the family must be
provided an opportunity for a hearing under the PHA administrative grievance procedure.
A.6 Required Policy Updates to Administrative Plans, ACOPs, and Tenant Selection
Plans
A.6.a Admission Policies
PHAs/MFH Owners must establish written screening criteria in their
Administrative Plans, ACOPs, or Tenant Selection Plans, as applicable, to
prohibit the admission of applicants who own net family assets that exceed
$100,000 (as adjusted for inflation) and/or real property that is suitable for
occupancy. Policies should indicate the general parameters PHAs/MFH Owners
will use when determining whether the location of real property constitutes a
geographic hardship.
A.6.b Reexamination Policies
Whether a PHA/MFH Owner chooses to adopt a total non-enforcement,
enforcement, limited enforcement, and/or exception policy for reexaminations,
that policy and accompanying details must be set forth in the PHA’s ACOP or
Administrative Plan or in a MFH Owner’s Tenant Selection Plan, as applicable.
PHAs/MFH Owners must also update their Administrative Plans, ACOPs, or
Tenant Selection Plans, as applicable, to indicate when they will initiate
termination or eviction proceedings after participant families are determined to be
out of compliance with the asset limitation, when the PHA/MFH Owner has
established either an enforcement policy or policies to permit families to cure
their noncompliance. PHAs/MFH Owners must initiate termination or eviction
proceedings for families who remain out of compliance with the asset limitation
within six months of the reexamination at which the non-compliance was
determined. Policies should indicate the general parameters PHAs/MFH Owners
will use when determining whether the location of real property constitutes a
geographic hardship.
25
ATTACHMENT B: TOPIC: CALCULATING INCOME
Regulations
24 CFR §§ 5.609(c)(1); 5.609(c)(2); 5.609(c)(4); 5.657(f); 882.515; 882.515(f); 882.808;
882.808(i)(5); 891.105; 891.410(c); 891.410(g)(1); 891.410(g)(2); 891.610(c); 891.610(g)(1);
891.610(g)(2); 891.750(c); 960.257; 982.516; and 982.516(f)
Applicable Programs
HUD Multifamily Housing HUD Multifamily Housing Public and Indian Housing
Section 8 (Project Based Rental Section 202/162 PAC, Section HCV (including Project-Based
Assistance) 202/8, Section 202/811 PRAC, vouchers), Public Housing, Section
Section 236 IRP, Section 811 PRA, 8 Moderate Rehabilitation, Section
SPRAC 8 Moderate Rehabilitation SRO
Yes Yes Yes
Summary
See each subtopic.
Subtopics
B.1 New Admissions and Interim Reexaminations
Regulations: 24 CFR §§ 5.609(c)(1); 882.515; 891.410(c) and (g)(2); 891.610(c) and
(g)(2); 960.257; and 982.516
Summary: When calculating a household’s income, including asset income, at the time
of admission to the program or during interim reexaminations, PHAs/MFH Owners must
use anticipated income (current income) (i.e., the family’s estimated income for the
upcoming 12-month period). This requirement is consistent with the pre-HOTMA
process for conducting income examinations at admission and for interim
reexaminations.
B.2 Annual Reexaminations
Regulations: 24 CFR §§ 5.609(c)(2); 882.808; 891.410(g)(1); and 891.610(g)(1)
960.257; and 982.516
Summary: The final rule revises the standards for income calculation during annual
reexamination.
PHAs/MFH Owners have the option of using a “safe harbor” income verification from
another federal means-tested program to verify gross annual income. See Attachment J
(paragraph J.4) (Determination of Income Using Other Means Tested Public Assistance
(i.e., “Safe Harbor”)) of this notice for an example of how to calculate annual income
using the safe harbor method.
During annual reexaminations, except where the PHA/MFH Owner uses a streamlined
income determination under 24 CFR §§ 5.657(d), 960.257(c), or 982.516(b) (see
Attachment I (paragraph I.8) (Streamlined Income Determination)), PHAs/MFH Owners
must first determine the family’s income for the previous 12-month period and use this
26
amount as the family income for annual reexaminations; however, adjustments to reflect
current income must be made. Any change of income since the family’s last annual
reexamination, including those that did not meet the threshold to process an interim
reexamination of family income in accordance with the PHA/MFH Owner’s policies and
24 CFR §§ 5.657(c), 960.257(b), or 982.516(c), must be considered. Income from assets
is always anticipated, irrespective of the income examination type.
A change in income, for example, may be a loss of income or the addition of a new
source of income. Changing to a different employer in the prior year does not necessarily
constitute a change if the income earned from either employer is substantially the same.
PHA/MFH Owners will look at the entirety of the family’s unearned income and earned
income from the prior year, in which earned income may have been one constant job or
many different jobs that start and stop. Cost of Living Adjustments (COLA) to Social
Security income and Social Security disability income are always considered changes to
income because the COLA is an adjustment that automatically occurs annually by law.B1
See Attachment B (paragraph B.3) of this notice for more information on the COLA. The
three steps outlined below apply for both earned and unearned income.
Overview of Calculating Annual Income at Annual Reexamination
Step 1: Determine the annual income for the previous 12-month period as defined at 24
CFR § 5.609(a) and (b). If there have been no changes to income beyond this calculation,
then this is the amount that will be used to determine the family’s rental assistance.
The PHA/MFH Owner reviews the following information to determine prior-year
income:
The EIV Income Report (must be pulled within 120 days of the effective date of the
annual reexamination to be considered current);
The income reported on the most recent reexamination HUD–50058/HUD–50059;
and
What the family certified to on the PHA/MFH Owner’s current annual reexamination
paperwork for prior-year income, if available.
Step 2: Take into consideration any interim reexamination of family income completed
since the last annual reexamination.
If an interim reexamination was performed within the reexamination cycle and there
are no additional changes, the PHA/MFH Owner must use the annual income from
the interim reexamination to determine the family’s rental assistance. The PHA/MFH
Owner may use the verification obtained from the interim reexamination for this step.
If the PHA/MFH Owner did not perform an interim reexamination or if the family
reports that there have been changes since the last reexamination, move to Step 3.
B1
P.L. 92–336: https://www.govinfo.gov/content/pkg/STATUTE-86/pdf/STATUTE-86-Pg406.pdf#page=16.
27
Step 3: If there were changes in annual income not processed by the PHA/MFH Owner
since the last reexamination, use current income.
Family reports their income for the prior year and whether there have been permanent
changes.
If there are no reported changes to an income source, the PHA/MFH Owner may use
documentation of prior-year income to calculate the annual income used for the current
annual reexamination HUD–50058/HUD–50059. For example, the PHA/MFH Owner
could use the following documentation :
EIV + self-certification (wages, Supplemental Security Income (SSI), Social Security,
and unemployment)
Current level 4B2 documents verifying prior-year income that are dated within the
required timeframe (120 days of receipt by the PHA/MFH Owner), for example:
Year-end statement
Pay stub with year-to-date amount
Tax forms (Form 1040, W2, 1099, etc.)
If there are reported changes by the family or the PHA/MFH Owner notes discrepancies
between EIV and what the family reports, follow the verification hierarchy to document
and verify income. See Attachment J (paragraph J.5) (Verification Hierarchy) of this
notice for information about verification.
Example B1: Calculating Annual Income at Annual Reexamination Using EIV
Background: Staff are processing the 3/1/2024 annual reexamination for Ruby Myers and her minor
daughter, Georgia. No interim reexaminations have been processed, and Ruby has not reported any
changes to annual income to the PHA/MFH Owner since the 3/1/2023 annual reexamination. The SSA
published 2024 COLA is 3.2 percent.
Last reexamination – 3/1/2023 Annual Reexamination
Ruby: Georgia:
Wages: $30,000 SSI: $10,980 ($915 monthly)
The EIV report pulled on 12/15/2023
Ruby: Georgia:
Wages Total: $33,651 SSI Total: $10,980
Quarter 3 of 2023: $8,859 (City Public School) 2023 benefit $915 monthly
Quarter 2 of 2023: $8,616 (City Public School)
Quarter 1 of 2023: $8,823 (County Public School)
Quarter 4 of 2022: $7,353 (County Public School)
B2
See Table J2.
28
Income Reported on Reexamination Application
Ruby: Georgia:
Wages at City Public School: $32,000 (switched SSI benefits: $10,980 (no changes in income)
jobs but no permanent change to amount)
Calculating Ruby’s wages: Calculating Georgia’s SSI benefit:
Step 1: Determine prior annual income from EIV Step 1: Determine the prior annual income from
(i.e., Q4 2022 through Q3 of 2023: $33,651). EIV (i.e., $915 x 12 months: $10,980).
Step 2: Take into consideration any interim Step 2: Take into consideration any interim
reexamination of family income completed since reexamination of family income completed since
the last annual reexamination (in this case, there the last annual reexamination (in this case, there
have been no interim reexaminations processed have been no interim reexaminations processed
since the last annual reexamination). since the last annual reexamination).
Step 3: Ruby certifies that the $33,651 of wages Step 3: Ruby certifies the SSI income in EIV is
in EIV is accurate and reflects her current annual accurate and reflects Georgia’s current annual
income, so the PHA/MFH Owner will use $33,651 income. The PHA/MFH Owner must adjust the
for annual wages for the 3/1/2024 annual prior-year income (2023 SSI benefit) by the 3.2-
reexamination given there have been no percent COLA and will use this amount to
additional changes to annual income. calculate annual SSI income for the 3/1/2024
annual reexamination:
COLA: $29.28 ($915 x 0.032
New gross SSI benefit: $11,331.36 ($944.28 x 12
months)
If Ruby did not agree with the annual wages
reported in EIV, the PHA/MFH Owner would be
required to verify her current income in
accordance with HUD’s verification hierarchy in
Attachment J (paragraph J.5) (Verification
Hierarchy) of this notice.
Summary of Annual Income (as reported on the HUD–50058/HUD–50059)
Ruby (Head of Household): Georgia (Other Youth Under 18):
Other Wage: $33,651 SSI: $11,748
Myers Family Total Annual Income: $45,399
Example B2: Calculating Annual Income at Annual Reexamination Using EIV:
Family Disagrees with EIV
Background: Staff are processing Paul Hewson’s 5/1/2024 annual reexamination. Since the last annual
reexamination, Paul reported a decrease in annual income that exceeded 10 percent. Last year, Paul
reported a decrease in earned income because he transferred from a full-time job at Sasha’s Sweets
to a part-time job at Viking Bakery. Following HUD’s EIV verification hierarchy, staff confirmed Paul
was no longer employed at Sasha’s Sweets and decreased his anticipated annual income from
$28,000 to $7,500 resulting from his new part-time employment at Viking Bakery; an interim
reexamination was processed effective 7/1/2023. After the 7/1/2023 interim, Paul worked briefly at two
different jobs, but he says he is no longer working and is not planning to work.
29
5/1/2023 Annual Reexamination
Wages: $28,000
Last Reexamination: 7/1/2023 Interim Reexamination
Wages: $7,500
The EIV report pulled on 1/15/2024
Wages Total: $18,271
Quarter 3 of 2023: $2,500 (Viking Bakery)
Quarter 3 of 2023: $796 (Sweet Tooth Candy Bar)
Quarter 2 of 2023: $1,300 (Sasha’s Sweets)
Quarter 2 of 2023: $584 (Larry’s Concessions)
Quarter 2 of 2023: $2,401 (Viking Bakery)
Quarter 1 of 2023: $6,500 (Sasha’s Sweets)
Quarter 4 of 2022: $600 (Sasha’s Sweets)
SS/SSI: No history of benefits.
Income Reported on Reexamination Application
Wages: $0 (permanent change; no longer receiving)
Social Security: $14,400 ($1,200 monthly)
Paul certified on the PHA’s annual reexamination paperwork that he does not agree with the annual
wages of $18,271 reported in EIV and it is not reflective of his current anticipated annual income. He
reported he is currently unemployed, and provided a copy of an award letter from the Social Security
Administration to document that he will begin receiving a monthly disability benefit of $1,200 effective
3/1/2024.
Calculating Wages and SS Benefit
Step 1: Determine prior annual income taking into consideration the 8/1/2023 interim reexamination
(i.e., EIV wages reflected Q4 2022 through Q3 2023: $18,271)
Step 2: Take into consideration any interim reexamination of family income completed since the last
annual reexamination. In this case, there was a 7/1/2023 interim that reduced wages to $7,500.
Step 3: Obtain documentation to verify current income and confirm Paul is no longer employed at
Viking Bakery or The Sweet Tooth Candy Bar (the employers reported in the most recent quarter of
EIV). This step is necessary, because Paul did not agree with the EIV income report or income
reported on the last interim reexamination. Paul reported that he is no longer working at all.
Process the annual reexamination effective 5/1/2024 using annual SS income of $14,400 and $0
wages.
30
Summary of Annual Income (as reported on the HUD–50058/HUD–50059)
Paul (Head of Household): $14,400 (SS)
Hewson Family Total Annual Income: $14,400
Example B3: Calculating Annual Income at Annual Reexamination
Background: Staff are processing the 11/1/2024 annual reexamination for Samantha and Fergus
Poole, head of household and spouse. On 2/14/2024 Samantha reported her monthly child support
payment was reduced from $200 to $100 per month, but an interim reexamination was not processed,
because the reduction in child support income for Samantha’s daughter, Hailey, did not result in a
decrease of 10 percent or more in annual adjusted income, and the PHA/MFH Owner did not establish
a lower threshold (see Attachment I, paragraph I.1). Samantha did not report any additional changes to
the PHA/MFH Owner.
Last reexamination – 11/1/2023 Annual Reexamination
Samantha: Fergus:
Business income: $28,000 Wages: $8,250
VA disability pension: $12,000 Other non-wage income: $3,000 (Go Fund Me
online fundraiser)
Child support: $2,400
The EIV report pulled on 9/16/2024
Samantha: Fergus:
Wages Total: $0 (no wage data reported since Q1 Wages Total: $8,600
2023)
Quarter 1 of 2024: $2,100 (Ian’s Fish ‘n’ Chips)
Quarter 1 of 2024: $500 (Claire’s Healthcare
Supplies)
Quarter 4 of 2023: $1,000 (Claire’s Healthcare
Supplies)
Quarter 3 of 2023: $1,800 (The Onion Garden
Shop)
Quarter 2 of 2023: $3,200 (Ivar’s Fish Haus)
31
Current Family Circumstances: Income Reported on Reexamination Application
Samantha and Fergus reported how much income was earned/received in the previous 12-month
period and noted permanent changes, where applicable, for each source of their income on PHA/MFH
Owner’s annual reexamination form. However, no information was reported by the family concerning
other non-wage income. Fergus reported only wages and his current employment at Ian’s Fish ‘n’
Chips for the annual reexamination. The family supplied the supporting documentation noted below to
the PHA/MFH Owner for the 11/1/2024 annual reexamination.
Samantha: Fergus:
Business income: $28,750 (last year); has Wages: $6,000
decreased to $18,000 (permanent change)
VA disability benefit: $12,000 (last year); has
increased to $12,300 (permanent change)
Child support: $2,400 (last year); has decreased
to $1,200 (permanent change)
Calculating Samantha’s Net Business Income
Step 1: Determine prior annual net business income (i.e., $28,000 on last HUD–50058/HUD–50059).
Step 2: Take into consideration any interim reexamination of family income completed since the last
annual reexamination. In this case, there have been no interim reexaminations processed since the
last annual reexamination.
Step 3: Adjust to reflect current net business income. Samantha reported on the annual
reexamination application that business income permanently decreased to $18,000. The PHA/MFH
Owner must obtain supporting documentation from Samantha that demonstrates current net business
income. Samantha provided documentation that supported the current annual net business income is
$18,000. Process the annual reexamination effective 11/1/2024 using annual net business income
determined in Step 3.
Calculating Samantha’s VA Pension Income
Step 1: Determine prior annual VA pension income (i.e., $12,000 supported by a VA award letter
Samantha supplied that documents the prior year monthly VA pension was $1,000).
Step 2: Take into consideration any interim reexamination of family income completed since the last
annual reexamination. In this case, there have been no interim reexaminations processed since the
last annual reexamination.
Step 3: The PHA/MFH Owner needs to adjust to reflect current VA pension income. Samantha
supplies a VA award letter showing the COLA adjusted monthly pension of $1,025, or $12,300
annually. Process the annual reexamination effective 11/1/2024 using annual VA pension income
determined in Step 3 ($12,300 in this example).
32
Calculating Samantha’s Child Support Income
Step 1: Determine prior annual child support income (i.e., $2,400 on the last HUD–50058/HUD–
50059).
Step 2: Take into consideration any interim reexamination of family income completed since the last
annual reexamination. In this case, there have been no interim reexaminations processed since the
last annual reexamination. The family reported a decrease from $200 to $100 monthly, but the change
was not processed because it did not meet the threshold.
Step 3: The family reported changes, so the PHA/MFH Owner must adjust to reflect current child
support income. In this example, the family submitted a child support history report from the local
child support office that documents regular $100 monthly child supports payments beginning 3/1/2024
through the current month. Process the annual reexamination effective 11/1/2024 using current annual
child support income determined in Step 3 ($1,200 in this example).
Calculating Fergus’s Wages
Step 1: Determine prior annual income from wages in EIV (i.e., Q2 2023 through Q1 of 2024: $8,600).
Step 2: Take into consideration any interim reexamination of family income completed since the last
annual reexamination. In this case, there have been no interim reexaminations processed since the
last annual reexamination.
Step 3: There is a discrepancy between what the family reported and EIV, so the PHA/MFH Owner
must verify and adjust to reflect current annual income from wages. Fergus reported $6,000 in annual
income from wages on the annual reexamination from a single employer, Ian’s Fish ‘n’ Chips. The
PHA/MFH Owner projected annual income of $7,800 based on the two paystubs for this employer, and
EIV shows $8,600 earned in the most recent four quarters in EIV. To complete Step 3, the PHA/MFH
Owner must do the following: resolve the discrepancy between EIV wages, the $6,000 annual income
Fergus reported, and the $7,800 projected based on the paystubs he provided, and verify he is no
longer employed at Claire’s Healthcare Supplies in accordance with HUD’s verification hierarchy and
local policies. The PHA/MFH Owner determined that Fergus reported his net vs. gross annual income
from wages, which he corrected on the annual reexamination form to reflect his current gross annual
income of $9,000. The PHA/MFH Owner verified Fergus was no longer employed at Claire’s
Healthcare Supplies and obtained two additional paystubs. Based on two current and consecutive
paystubs, Fergus is now projected to earn $9,360 annually. Process the annual reexamination effective
11/1/2024 using income from wages determined in Step 3 ($9,360 in this example).
Calculating Fergus’s Other Non-Wage Income
Step 1: Determine prior annual income from other non-wage income (i.e., $3,000 on the last HUD–
50058/HUD–50059).
Step 2: Take into consideration any interim reexamination of family income completed since the last
annual reexamination. In this case, there have been no interim reexaminations processed since the
last annual reexamination.
Step 3: The family did not report any non-wage income on the annual reexamination form, but it was
included on the last HUD–50058/HUD–50059. The PHA/MFH Owner must verify and adjust to reflect
current non-wage income. The PHA/MFH Owner must verify no income was received through a “Go
Fund Me” online fundraiser so that it may be excluded. Fergus provided a self-certification that he
hasn’t solicited funds online and doesn’t plan to in the following year; he also provided records from the
account that documented no fundraising activity in the prior 12-month period. Process the annual
reexamination effective 11/1/2024 using annual non-wage income of $0 determined in Step 3.
33
Summary of Annual Income (as reported on the HUD–50058/HUD–50059)
Samantha (Head of Household): Fergus (Co-head):
Own business: $18,000 Wages: $9,360
Pension: $12,300
Child support: $1,200
Poole Family Total Annual Income: $40,860
B.3 Applying the Current SSA COLA at Next Annual and Interim Reexamination
Regulations: 24 CFR §§ 5.609(c)(2); 960.257; 982.516; and 891.105
Summary: Annually in October, the Social Security Administration (SSA) announces
the cost-of-living adjustment (COLA) by which federal SS and SSI benefits are adjusted
to reflect the increase, if any, in the cost of living as measured by the Consumer Price
Index for Urban Wage Earners and Clerical Workers prepared by the Bureau of Labor
Statistics. The purpose of the COLA is to ensure that the purchasing power of SS and SSI
benefits are not eroded by inflation. The federal COLA does not apply to state-paid
disability benefits. Additional information regarding the SSA COLA is available online at
www.socialsecurity.gov.
Effective the day after SSA has announced the COLA, PHAs/MFH Owners are required
to factor in the COLA when determining SS and SSI annual income for all annual
reexaminations and interim reexaminations of family income that have not yet been
completed and will be effective January 1 or later of the upcoming year.
Example B4: Adjusting the SS Benefit by the COLA
Elizabeth Peterson receives $500 a month (SS benefit). The PHA/MFH Owner is processing her
annual reexam (in November 2023), which is effective 1/1/2024. The PHA/MFH Owner must determine
annual SS income as follows:
Current benefit amount: $500
COLA: $16.00 ($500 x 3.2 percent [or 0.032])
New gross SS benefit effective 01/01/2024: $516.00 ($500 current benefit + $16 COLA)
Annual SS income effective 1/1/2024: $6,192 ($516 x 12)
B.4 De Minimis Errors
Regulations: 24 CFR §§ 5.609(c)(4); 5.657(f); 960.257(f); 982.516(f); 882.515(f);
882.808(i)(5); 891.105; and 891.655
Summary: PHAs/MFH Owners will not be considered out of compliance solely due to
de minimis errors in calculating family income. De minimis errors occur when a
PHA/MFH Owner’s determination of a family’s income deviates from the correct income
determination by no more than $30 per month in monthly adjusted income (or $360 in
annual adjusted income). HUD may revise the threshold amount that constitutes a “de
minimis error” through rulemaking. PHAs/MFH Owners will not be issued a finding by
34
HUD or the Contract Administrator (MFH only) for de minimis errors in income
calculation.
As PHAs/MFH Owners become aware of the existence of an income calculation error,
they are obligated to correct the error(s) retroactive to the effective date of the action the
error was made regardless of the dollar amount associated with the error. PHAs/MFH
Owners must take corrective action to credit or repay a family if the family was
overcharged tenant rent, including when PHAs/MFH Owners make de minimis errors in
the income determination. Families will not be required to repay the PHA/MFH Owner in
instances where the PHA/MFH Owner miscalculated income resulting in a family being
undercharged for rent.
PHAs/MFH Owners must revise their Administrative Plans, ACOPs, and Tenant
Selection Plans, as applicable, to reflect how they will repay or credit a family the
amount they were overcharged as a result of the PHA/MFH Owner’s de minimis error in
income determination.
PHA/MFH Owner Discretion: None.
35
ATTACHMENT C: TOPIC: DEDUCTIONS AND EXPENSES
Regulations
24 CFR §§ 5.603; 5.611(a)(1); 5.611(a)(2); 5.611(a)(3); 5.611(a)(3)(ii); 5.611(b)(1);
5.611(b)(1)(i); 5.611(b)(1)(ii); 5.611(c)(1); 5.611(c)(1)(D); 5.611(c)(2); 5.611(d); 5.611(e);
5.611(e)(2); and 891.105
Applicable Programs
HUD Multifamily Housing HUD Multifamily Housing Public and Indian Housing
Section 8 (Project Based Rental Section 202/162 PAC, Section HCV (including Project-Based
Assistance) 202/8, Section 202/811 PRAC, vouchers), Public Housing, Section
Section 236 IRP, Section 811 PRA, 8 Moderate Rehabilitation, Section
SPRAC 8 Moderate Rehabilitation SRO
Yes Yes Yes
Summary
PHAs/MFH Owners must consider mandatory deductions when determining a family’s annual
adjusted income. PHAs may also consider additional (permissive) deductions to a family’s
annual income if established by a written policy in the PHA’s ACOP or Administrative Plan.
Subtopics
C.1 Dependent Deduction
Regulation: 24 CFR § 5.611(a)(1)
Summary: Effective January 1, 2024, the dependent deduction amount is $480. This
amount will be adjusted annually (see Attachment H) and applies to a family’s next
annual or interim reexamination after the annual adjustment, whichever is sooner. Not
later than September 1 annually, HUD will publish the CPI–W adjusted dependent
deduction to the HUDUser Web site.C1 PHAs/MFH Owners must implement the adjusted
dependent deduction for all income examinations that are effective on January 1 or later.
PHA/MFH Owner Discretion: None.
C.2 Elderly/Disabled Family Deduction
Regulation: 24 CFR § 5.611(a)(2)
Summary: Effective January 1, 2024, the elderly/disabled family deduction increases
from $400 to $525 and applies to a family’s next interim or annual reexamination,
whichever is sooner, after the date on which the PHA/MFH Owner implements the new
elderly/disabled family deduction. The amount of the deduction will be adjusted annually
(see Attachment H). Not later than September 1 annually, HUD will publish the CPI–W
adjusted elderly/disabled family deduction to the HUDUser Web site.
C1
https://www.huduser.gov/portal/pdrdatas_landing.html.
36
PHA/MFH Owner Discretion: None.
C.3 Unreimbursed Health and Medical Care Expenses and Reasonable Attendant Care
and Auxiliary Apparatus Expenses Deduction
C.3.a New Higher Threshold for Deducting Health and Medical Care Expenses
and Unreimbursed Reasonable Attendant Care and Auxiliary Apparatus
Expenses
Regulation: 24 CFR § 5.611(a)(3)
Summary: The final rule establishes that the sum of unreimbursed health and
medical care and reasonable attendant care and auxiliary expenses that exceed 10
percent of the family’s annual income can be deducted from annual income. Prior
to January 1, 2024, the threshold was 3 percent of the family’s annual income.
C.3.b New Definition of Unreimbursed Health and Medical Care Expenses and
Reasonable Attendant Care and Auxiliary Apparatus Expenses Deduction
Regulation: 24 CFR § 5.603
Summary: Health and medical care expenses, as defined in 24 CFR § 5.603,
include costs incurred for the diagnosis, cure, mitigation, treatment, or prevention
of disease or payments for treatments affecting any structure or function of the
body. Health and medical care expenses include medical insurance premiums and
long-term care premiums that are paid or anticipated during the period for which
annual income is computed. Medical insurance premiums continue to be eligible
health and medical care expenses. However, health and medical care expenses
may be deducted from annual income only if they are eligible and not otherwise
reimbursed and may only be deducted for elderly or disabled families.
Although HUD revised the definition of health and medical care expenses to
reflect the Internal Revenue Service (IRS) general definition of medical expenses,
HUD is not permitting PHAs/MFH Owners to specifically align their policies
with IRS Publication 502C2 for determining which expenses are included in
HUD’s mandatory deduction for health and medical care expenses. IRS
Publication 502, in some instances, may instruct that certain expenses are not to
be considered medical expenses that would otherwise be allowed under HUD’s
definition of health and medical care expenses. PHAs/MFH Owners must review
each expense to determine whether it is eligible in accordance with HUD’s
definition of health and medical care expenses.
PHA/MFH Owner Discretion: None.
C.3.c Unreimbursed Reasonable Attendant Care and Auxiliary Apparatus
Expenses
Regulation: 24 CFR § 5.611(a)(3)(ii)
C2
Publication 502 explains the itemized deduction for medical and dental expenses used for tax purposes, including
what expenses, and whose expenses, can and cannot be included in figuring the deduction.
37
Summary: Auxiliary apparatus items can include, for example, expenses for
wheelchairs, ramps, adaptations to vehicles, guide dogs, assistance animals, or
special equipment to enable a person who is blind or has low vision to read, or
type or special equipment to assist a person who is deaf or hard of hearing. Some
examples of attendant care expenses can include teaching a person with
disabilities how to perform day-to-day tasks independently like cleaning, bathing,
doing laundry, and cooking. Attendant care can be 24-hour care, or care during
sporadic periods throughout the day.
In order to claim the deduction for the cost of unreimbursed reasonable attendant
care and auxiliary apparatus expenses, the family must include a person with a
disability, and the expenses must enable any member of the family (including the
member who is a person with a disability) to be employed. If the unreimbursed
reasonable attendant care and auxiliary apparatus expense exceeds the amount
earned by the person who was enabled to work, the deduction will be capped at
the amount earned by that individual.
PHA/MFH Owner Discretion: None.
C.4 Hardship Exemptions for Health and Medical Care Expenses and Reasonable
Attendant Care and Auxiliary Apparatus Expenses
Regulations: 24 CFR §§ 5.611(c)(1); 5.611(c)(1)(D); and 5.611(c)(2)
Summary: As stated in C.3.a, the threshold to deduct health and medical care expenses
and reasonable attendant care and auxiliary apparatus expenses has been increased from
an excess of 3 to an excess of 10 percent of annual income. Concurrently with this
increase, the regulations provide financial hardship exemptions for unreimbursed health
and medical care expenses, and for reasonable attendant care and auxiliary apparatus
expenses for eligible families. A family will benefit from this hardship exemption only if
the family has eligible expenses that can be deducted in excess of 5 percent of annual
income. In order to claim unreimbursed health and medical care expenses, the family
must have a head, co-head, or spouse that is elderly or a person with a disability. In order
to claim unreimbursed reasonable attendant care and auxiliary apparatus expenses,
the family must include a person with a disability, and the expenses must enable any
member of the family (including the member who is a person with a disability) to be
employed.
To initiate, extend,C3 or conclude a hardship exemption only, PHAs/MFH Owners will
process and submit a non-interim reexamination transaction as described in Attachment I
(paragraph I.4) (Non-Interim Reexamination Transactions) of this notice.
Families may be eligible for relief under one of two categories; phased-in relief or
general relief, as defined below.
Note: A family receiving phased-in relief may request to receive general hardship relief
instead; once a family chooses to obtain general relief, a family may no longer
receive the phased-in relief.
C3
See paragraph C.6.e, below.
38
C.4.a Phased-In Relief
This section describes the phased-in relief for families affected by the statutory
increase in the threshold to receive unreimbursed health and medical care and
reasonable attendant care and auxiliary apparatus expense deductions from annual
income.
All families who received a deduction for unreimbursed health and medical care
and/or reasonable attendant care or auxiliary apparatus expenses based on their
most recent income review prior to January 1, 2024, will begin receiving the 24-
month phased-in relief at their next annual reexamination or interim
reexamination, whichever occurs first after the date on which the PHA/MFH
Owner implements the phased-in relief. Families who receive phased-in relief will
have eligible expenses deducted that exceed 5 percent of annual income for 12
months. Twelve months after the 5 percent phase-in began, families will have
eligible expenses deducted that exceed 7.5 percent of annual income for the
immediately following 12 months. After the family has completed the 24 months
phase-in at the lower thresholds, as described above, the family will remain at the
10 percent threshold, unless the family qualifies for relief under the general
hardship relief provision.
When an eligible family’s phased-in relief begins at an interim reexamination, the
PHA/MFH Owner will need to process another transaction one year later to move
the family along to the next phase. The transaction can be either an interim
reexamination if triggered, or a non-interim reexamination transaction.
The following table demonstrates when the phased-in relief will begin and
increase every 12 months during the 24-month phase-in period.
39
Table C1: Phased-in Relief Timing
In Excess Threshold
Percentage for Families
Receiving the Health and
Medical Expenses and
Phased-in Relief Timing Reexamination Type
Reasonable Attendant Care
and Auxiliary Apparatus
Expense Deduction as of
January 1, 2024
First annual reexamination or 5 percent Annual or Interim
interim reexamination, Reexamination
whichever occurs first on or after
the date on which the PHA/MFH
Owner implements the phased-
in relief.
Twelve months after the 5- 7.5 percent Annual Reexamination or
percent phase-in began Interim Reexamination
If no Interim Reexamination is
triggered, then the PHA/MFH
Owner processes with a non-
interim transaction.
Twelve months after the 7.5- 10 percent Annual Reexamination or
percent phase-in began Interim Reexamination
If no Interim Reexamination is
triggered, then the PHA/MFH
Owner processes with a non-
interim reexamination
transaction.
Example C1: Phased-In Relief (Health and Medical Care Expenses and
Reasonable Attendant Care and Auxiliary Apparatus Expenses)
Ms. Bell’s annual reexamination is due on June 1, 2024. Her last annual reexamination was effective
June 1, 2023, and she received a deduction for unreimbursed health and medical expenses. She did
not have any interim reexaminations after her annual reexamination was completed. Ms. Bell’s
unreimbursed health and medical expenses were 8 percent of her annual income. For her annual
reexamination effective June 1, 2024, the PHA determines that Ms. Bell’s annual income is $10,000
and her unreimbursed health and medical expenses are $800 (8 percent of her annual income).
Although Ms. Bell’s unreimbursed health and medical care expenses are not in excess of the new 10-
percent threshold to receive the deduction, since she was receiving a deduction for unreimbursed
health and medical expenses on January 1, 2024, Ms. Bell is automatically eligible for the deduction
pursuant to the phased-in hardship exemption. The PHA/MFH Owner will apply the phased-in relief
threshold to deduct the expenses that exceed 5 percent of her annual income which is $300 ($800 -
$500) for this reexamination.
Since her expenses are more than 5 percent of her annual income, the threshold for Ms. Bell’s
unreimbursed health and medical expense deduction is 5 percent for the next 12 months, then the
threshold will be increased to 7.5 percent. Assuming her medical expenses are still $800, she will be
able to deduct $50 ($800 - $750) for the next 12 months.
40
PHAs/MFH Owners must track the 24-month phase-period for each eligible
family, even if a family’s expenses go below the appropriate phase-in percentage,
during the first or second 12-month phase-in period. The phase-in must continue
for families who move with continued assistance in the HCV program or port to
another PHA. The phase-in must also continue for families who move to another
Public Housing unit at the same PHA, or who transfer internally to another unit
within the same MFH property. The family must receive phased-in relief if they
are determined to be eligible as of January 1, 2024.
The table below describes the potential phased-in relief outcomes based on a
family’s status in PIH and MFH programs:
Table C2: Phased-in Relief Outcomes According to Family’s Status in
Program for Multifamily Housing Program
Family’s Status in Is Family Receiving Outcome of Phased- Required
Program Phased-in Relief? in Relief Documentation
Family’s assistance is Yes Phased-in relief ends N/A. No
terminated in any upon termination. documentation of
program. When readmitted, phased-in relief is
family’s expense needed.
deduction will be
calculated using the
10-percent threshold
unless request for
general relief is
approved by the
PHA/MFH Owner.
Public Housing: Yes Families must The PHA or MFH
Family transfers PH continue to receive Owner will use the
units within the same the phased-in relief. existing phase-in
PHA. The family will receive documentation to
the remaining determine the
Housing Choice
calendar months of remaining calendar
Voucher: Family
the percentage months of the
moves with continued
phase-in in their new percentage phase-in.
assistance in the HCV
unit.
program with the
same PHA or ports to
a new PHA.
MFH: Family transfers
units within the same
MFH property and are
not treated as a new
admission.
Family is treated as a Yes Unless the PHA/MFH If the PHA/MFH
new admission under has a written policy to Owner elects to
a different continue the phased- continue the phased-
property/program in relief upon in hardship relief, then
(e.g., family moves admission, the the following
from one MFH family’s expense documentation is
41
property to another deduction will be required: Copy of
MFH property, the calculated using the forms HUD–50058 or
family moves from 10-percent threshold 50059 from the family
Public Housing to the unless request for showing phased-in
HCV program, etc.). general relief is relief.
approved by
If the forms are
PHA/MFH Owner.
unavailable, then the
PHA/MFH Owner may
obtain self-
certification from
family declaring
effective date of 5-
percent or 7.5-percent
phase-in. The
PHA/MFH Owner
must document in the
file the reason that the
forms HUD-50058 or
50059 were
unavailable.
Unit in which family Yes Families must Copy of forms HUD–
resides converts to continue to receive 50058 or 50059 from
PBV or PBRA funding the phased-in relief. the family showing
under the Rental The family will receive phased-in relief. If the
Assistance the remaining forms are unavailable,
Demonstration. calendar months of then the PHA/MFH
the percentage Owner may obtain
phase-in in their new self-certification from
unit. family declaring
effective date of 5-
percent or 7.5-percent
phase-in. The
PHA/MFH Owner
must document in the
file the reason that the
forms HUD-50058 or
50059 were
unavailable.
PHA/MFH Owner Discretion: PHAs/MFH Owners may establish a policy to
continue the phased-in hardship relief for families who were eligible for relief as
of January 1, 2024, and who are treated as new admissions under a different
program.
C.4.b General Relief
This section describes when a family is eligible for general relief related to the
health and medical care expense and reasonable attendant care and auxiliary
apparatus expense deduction.
To receive general relief, a family must demonstrate that the family’s
unreimbursed health and medical care expenses or unreimbursed reasonable
attendant care and auxiliary apparatus expenses increased, or the family’s
42
financial hardship is a result of a change in circumstances that would not
otherwise trigger an interim reexamination.
Relief is available regardless of whether the family previously received an
unreimbursed health and medical care expense deduction, unreimbursed
reasonable attendant care and auxiliary apparatus expense deduction, are currently
receiving phased-in hardship relief, or were previously eligible for either this
general relief or the phased-in relief.
If a PHA/MFH Owner determines that a family is eligible for general relief, the
family will receive a deduction for the sum of the eligible expenses that exceed 5
percent of annual income. The family’s hardship relief ends when the
circumstances that made the family eligible for the relief are no longer applicable
or after 90 days, whichever comes earlier. However, PHAs/MFH Owners may,
pursuant to their own discretionary policy, extend the relief for one or more
additional 90-day periods while the family’s hardship condition continues.
Example C2: General Relief (Health and Medical Care Expenses and
Reasonable Attendant Care and Auxiliary Apparatus Expenses)
Mr. Beck’s annual reexamination is due on August 1, 2024. In his last reexamination, he did not have
any unreimbursed health and medical expenses and/or auxiliary and attendant care expenses.
However, Mr. Beck has since been in a car accident, and he has increased eligible health and medical
expenses equal to 6 percent of his annual income. On February 15, 2024, Mr. Beck asks the
PHA/MFH Owner for a hardship exemption to allow him to receive a health and medical care expense
deduction, which will help him cover his rent.
The PHA/MFH Owner determines that the family Is eligible for general relief and an interim
reexamination would not have otherwise been triggered. The PHA/MFH Owners processes a non-
interim change that applies a health and medical expense deduction for the eligible expenses that
exceed 5 percent of annual income for 90 days. The PHA/MFH Owner may extend the relief for one or
more additional 90-day periods while Mr. Beck’s hardship condition continues and may extend the
exemption beyond 90 days if a policy for extending hardship relief is included in the written policy for
the PHA/MFH Owner.
PHA/MFH Owner Discretion: PHAs/MFH Owners must establish written
policies regarding the types of circumstances that will allow a family to qualify
for a financial hardship and when such deductions may be eligible for additional
90-day extensions. PHAs/MFH Owners must develop policies requiring families
to report if the circumstances that made the family eligible for the hardship
exemption are no longer applicable.
Examples of circumstances constituting a financial hardship may include the
following situations:
The family is awaiting an eligibility determination for a federal, state, or local
assistance program, such as a determination for unemployment compensation
or disability benefits;
The family’s income decreased because of a loss of employment, death of a
family member, or due to a natural or federal/state declared disaster; or
Other circumstances as determined by the PHA/MFH Owner.
43
PHAs/MFH Owners must not conduct an interim reexamination to add, remove,
or to extend a hardship exemption, unless another change experienced by the
family triggers an interim reexamination under the applicable regulation or in
accordance with the PHA/MFH Owner’s discretionary policies on conducting
interim reexaminations for adjusted income decreases that are less than ten
percent. Instead, the PHA/MFH Owner will process and submit a non-interim
reexamination transaction as described in Section 16.4 (Non-Interim
Reexamination Transactions) of this notice.
C.5 Child-Care Expenses Deduction and Hardship Exemption to Continue Child-Care
Expenses Deduction
Regulation: 24 CFR §§ 5.603 Child-Care Expenses and 5.611(d)
See also Attachment I (paragraph I.4) (Non-Interim Reexamination Transactions).
Summary: Under 24 CFR § 5.611(d), any reasonable child-care expenses necessary to
enable a member of the family to be employed or to further their education are deducted
from income. Reasonable child-care expenses are defined in 24 CFR § 5.603(a) and are
expenses for the care of children (including foster children if the unreimbursed child-care
expenses are paid from the family’s annual income and not from another source, such as
a stipend from the child welfare agency), under 13 years of age, when all the following
statements are true:
The care is necessary to enable a family member to be employed or to further his or
her education (e.g., work, look for work, or further their education (academic or
vocational)); and
The expense is not reimbursed by an agency or individual outside the household.
The amount deducted must not exceed the amount of employment income that is
included in annual income.
A family whose eligibility for the child-care expense deduction is ending may receive a
hardship exemption to continue receiving a child-care expense deduction in certain
circumstances when the family no longer has a member that is working, looking for
work, or seeking to further their education, and the deduction is necessary because the
family is unable to pay their rent.
When a family requests a hardship exemption to continue receiving a child-care expense
deduction that is ending, the PHA/MFH Owner must recalculate the family’s adjusted
income and continue the child-care deduction if the family demonstrates to the
PHA’s/MFH Owner’s satisfaction that the family is unable to pay their rent (see
Attachment C (paragraph C.6.a) (Policy for Determination of the Family’s Inability to
Pay Rent)) because of loss of the child-care expense deduction and the child-care expense
is still necessary even though the family member is no longer working, looking for work,
or furthering their education. The hardship exemption and the resulting alternative
adjusted income calculation must remain in place for a period of up to 90 days. The
PHA/MFH Owner, at their discretion, may extend such hardship exemptions for
additional 90-day periods based on family circumstances.
44
To initiate, extend or conclude a hardship exemption, PHAs/MFH Owners will submit a
non-interim transaction code on form HUD–50058/HUD–50059, unless there is an
accompanying event that triggers an interim reexamination.
Example C3: Hardship Exemption to Continue Child-Care Expense Deduction
Ms. Branch had been paying $250 per week for her child, Violet, to attend child care, while she was
employed at a local coffee shop. Ms. Branch became unemployed when the coffee shop permanently
closed. Ms. Branch has plans to enroll in college in two months. Although Ms. Branch has the
availability to watch Violet, the child-care center has a long waiting list, and if Ms. Branch pulls Violet
out temporarily, she would likely be without reliable child care when she starts college. Continuing to
pay child-care expenses while not receiving earned income has made the family unable to pay their
rent portion.
The PHA/MFH Owner determined that Ms. Branch met the hardship exemption criteria, as established
in the MFH Owner’s written policies, and is unable to pay rent. The PHA/MFH Owner will allow Ms.
Branch to continue to receive the child-care expense deduction for 60 days as Ms. Branch is
anticipated to enroll in college in the next two months.
PHA/MFH Owner Discretion: PHAs/MFH Owners must develop policies requiring
families to report if the circumstances that made the family eligible for the hardship
exemption are no longer applicable. PHAs/MFH Owners may extend hardship
exemptions for additional 90-day periods based on family circumstances as stated in their
written policies.
C.6 Hardship Policy Requirements
C.6.a Policy for Determination of the Family’s Inability to Pay Rent
Regulation: 24 CFR § 5.611(e)
Summary: PHAs/MFH Owners must establish policies on how they define what
constitutes a hardship (i.e., when a family is unable to pay rent, triggering
eligibility for a hardship exemption).
PHA/MFH Owner Discretion: PHAs/MFH Owners have discretion to establish
policies for the purpose of determining eligibility for general hardship relief for
the health and medical care expense deduction and for the child-care expense
hardship exemption. PHAs/MFH Owners must describe these policies in their
ACOPs, Administrative Plans, or Tenant Selection Plans, as applicable.
Some factors to consider when determining if the family is unable to pay rent may
include determining that the rent, utility payment, and applicable expenses (child-
care expenses or health and medical expenses) is more than 45 percent (for
example) of the family’s adjusted income, or verifying whether the family has
experienced unanticipated expenses, such as large medical bills, that have affected
their ability to pay their rent. PHA/MFH Owners may use different percentage
thresholds or methods for determining a family’s inability to pay rent; the
examples provided in this paragraph are for consideration purposes.
C.6.b Family Notification of Hardship Exemption
Regulation: 24 CFR § 5.611(e)(2)
45
Summary: PHAs/MFH Owners must promptly notify families in writing of the
change in the determination of adjusted income and the family’s rent resulting
from the application of the hardship exemption. The written notice must also
inform the family of the dates that the hardship exemption will begin and expire
and the requirement for the family to report to the PHA/MFH Owner if the
circumstances that made the family eligible for relief are no longer applicable.
The notice must also state that the family’s adjusted income and tenant rent will
be recalculated upon expiration of the hardship exemption. PHAs/MFH Owners
must provide families 30 days’ notice of any increase in rent.
PHAs/MFH Owners are encouraged to communicate the availability of hardship
exemptions and how to request a hardship to all applicants and families prior to
beginning to comply with HOTMA.
PHA/MFH Owner Discretion: None.
C.6.c Family Notification of Hardship Exemption Denial
PHAs/MFH Owners must promptly notify families in writing if they are denied
either an initial hardship exemption or an additional 90-day extension of the
exemption. The notification must specifically state the reason for the denial.
C.6.d Family Notification of Hardship Exemption Termination
PHAs/MFH Owners must notify the family if the hardship exemption is no longer
necessary and will be terminated because the circumstances that made the family
eligible for the exemption are no longer applicable. The notice must state the
termination date and provide 30 days’ notice of rent increase, if applicable.
Example C4: Termination of Hardship Exemption
The Olivera family is currently receiving a hardship exemption for child-care expenses. The family
received an interim reexamination to decrease their earned income when an adult family member went
on unpaid medical leave. The family is unable to pay rent during this time but still needs child care
while the adult family member is receiving physical therapy. The family subsequently reports to the
PHA/MFH Owner that the adult family member will resume employment in 3 weeks on March 23, at
which point the family will no longer need the child-care hardship exemption. When the hardship
exemption ends, the PHA/MFH Owner will process an interim reexamination to add the family’s earned
income and restart the non-hardship child-care expense deduction. The PHA/MFH Owner has a policy
to consider earned income increases following an interim reexamination due to a decrease in income
(see Attachment I (paragraph I.2)).
The PHA/MFH Owner must notify the family in writing that the hardship exemption will be terminated
effective March 23 and provide the family with 30 days’ notice of any rent increase. The family’s rent
increase will be effective on May 1.
C.6.e Extension of Hardship Exemption for Additional 90-Day Period(s)
PHAs/MFH Owners may at their discretion extend hardship exemptions for
additional 90-day periods if the hardship continues pursuant to the PHA/MFH
Owner’s hardship policies. This provision applies to families receiving hardship
exemptions for the child-care expenses deduction and general hardship relief for
health and medical care expenses and reasonable attendant care and auxiliary
apparatus expenses.
46
PHA/MFH Owners may extend the hardship relief for as many 90-day periods as
the hardship continues to affect the family. Policies for extending hardship relief
for additional 90-day periods must be established in PHAs’ Administrative Plans
or ACOPs, and in MFH Owners’ Tenant Selection Plans.
PHAs/MFH Owners must obtain third-party verification of the family’s inability
to pay rent or must document in the file the reason that third-party verification
was not available. PHAs/MFH Owners must attempt to obtain third-party
verification prior to the end of the 90-day period.
C.7 Additional (Permissive) Deductions
Regulation: 24 CFR § 5.611(b)(1)
Summary: A PHA may, but is not required to, establish an additional deduction or
deductions from a family’s annual income. These deductions are also known as
“permissive deductions.” Note that the public housing Operating Fund formula is not
revised to account for any decrease in PHA revenue attributable to implementing
permissive deductions. Likewise, the subsidy costs attributable to implementing
permissive deductions will not be taken into consideration in determining the PHA’s
HCV renewal funding or moderate rehabilitation funding. PHAs that adopt permissive
deductions are required to incorporate these policies as part of the Administrative Plan or
ACOP, as applicable.
MFH Owners are not permitted to adopt permissive deductions.
PHAs can respond to community needs by establishing a wide range of permissive
deductions, including permissive deductions to provide incentives for families to work.
Program regulations do not specify what types of permissive deductions are allowable.
PHAs operating the Public Housing program have previously adopted permissive
deductions that incentivize or encourage self-sufficiency and economic mobility.
As examples, a PHA may adopt an income deduction based on the following:
The amount earned by certain members of the family (e.g., all income earned by
elderly family members, etc.);
The amount earned by families having certain characteristics (e.g., all income earned
by family members employed by nonprofit organizations, etc.);
the amount received by families or members from guaranteed income programs
offered by select states and local governments;
The amount earned by families or members during a certain time period or from
certain sources (e.g., all income earned by full-time dependent students between June-
August, all income earned by family members employed by nonprofit organizations,
etc.)
The amount paid from the family’s annual income, and not another source such as
Medicaid or a child welfare agency, for unreimbursed health or medical expenses of a
foster child or foster adult.
47
PHAs are still subject to federal nondiscrimination requirements, including the obligation
to provide reasonable accommodations that may be necessary for households with family
members with disabilities.
C.7.a Additional (Permissive) Deductions: Public Housing Only
Regulation: 24 CFR § 5.611(b)(1)(i)
Summary: PHAs may continue to adopt additional deductions from annual
income in the Public Housing program. Permissive deductions may be used to
incentivize or encourage self-sufficiency and economic mobility. A PHA that
adopts such deductions will not be eligible for an increase in Capital Fund
and Operating Fund formula grants based on the application of such
deductions, so the financial impact of implementing permissive deductions must
be carefully evaluated. PHAs may adopt permissive deductions for Public
Housing only if they have established a written policy for such deductions.
PHAs must put the total dollar amounts of any permissible deductions in column
8d and line 8e of the form HUD-50058.
PHA/MFH Owner Discretion: PHAs are not required to adopt permissive
deductions, but any PHA establishing permissive deductions in the Public
Housing program must create written policies in the PHA’s ACOP. MFH Owners
are not permitted to adopt permissive deductions.
C.7.b Additional (Permissive) Deductions: HCV and Moderate Rehabilitation Only
Regulation: 24 CFR § 5.611(b)(1)(ii)
Summary: When deciding whether to adopt a permissive deduction for the HCV
program, the PHA will need to review its Housing Assistance Payments (HAP)
funds utilization and projected leasing closely to ensure that enough HAP is
available to support the number of families currently or planned to be leased. The
costs attributable to permissive deductions will not be taken into consideration in
determining the PHA’s HCV renewal funding or Moderate Rehabilitation/SRO
funding. A PHA must have sufficient funding to cover the increased HAP cost of
the deductions.
For the HCV program, PHAs will be required to report any HAP spent on
permissive deductions into VMS monthly. Additional guidance for reporting HAP
spent on permissive deductions in VMS will be provided in the VMS Manual.
For Moderate Rehabilitation programs, PHAs will be required to report the
additional subsidy cost as part of the Moderate Rehabilitation Year End
Settlement they are currently required to submit to HUD.
Since permissive deductions will be excluded from the renewal calculation, PHAs
may use outside funding to cover the cost. For example, the PHA may receive
non-federal funding to cover the cost of a particular permissive deduction. This
could also apply for research studies where the research director asks the PHA to
exclude stipends or basic/guaranteed income amounts received during the study
period, and the research study provides funding to the PHA to cover the cost.
48
PHA/MFH Owner Discretion: PHAs are not required to adopt permissive
deductions, but any PHA establishing permissive deductions in the HCV or
Moderate Rehabilitation/SRO programs must create written policies in the PHA’s
HCV Administrative Plans.
MFH Owners are not permitted to adopt permissive deductions.
49
ATTACHMENT D: TOPIC: APPLICABLE FAIR HOUSING AND CIVIL RIGHTS
REQUIREMENTS
Regulations
24 CFR §§ 5.105(a), 8.6, 982.53; 28 CFR §§ 35.160 and 36.303
Applicable Programs
HUD Multifamily Housing HUD Multifamily Housing Public and Indian Housing
Section 8 (Project Based Rental Section 202/162 PAC, Section HCV (including Project-Based
Assistance) 202/8, Section 202/811 PRAC, vouchers), Public Housing, Section
Section 236 IRP, Section 811 PRA, 8 Moderate Rehabilitation, Section
SPRAC 8 Moderate Rehabilitation SRO
Yes Yes Yes
Summary
While HOTMA did not revise existing Fair Housing or Civil Rights requirements, PHAs/MFH
Owners are reminded to follow all applicable nondiscrimination and equal opportunity
requirements at 24 CFR § 5.105(a) and 24 CFR § 982.53, including but not limited to:
the Fair Housing Act;
Section 504 of the Rehabilitation Act of 1973;
Title VI of the Civil Rights Act of 1964;
the Age Discrimination Act;
HUD’s Equal Access Rule; and
Title II of the Americans with Disabilities Act of 1990.
These requirements prohibit discrimination on the basis of race, color, religion, sex (including
gender identity and sexual orientation), familial status, national origin, disability, age, and
marital status. PHAs/MFH Owners must also comply with Title III of the Americans with
Disabilities Act of 1990, as applicable (see 28 CFR part 36).
When an assisted household includes a person with disabilities, a reasonable accommodation
may be necessary. A reasonable accommodation is a change, exception, or adjustment to rules,
policies, practices, or services that may be necessary in order to enable an applicant or resident
with a disability to have an equal opportunity to use and enjoy a dwelling, including public and
common areas, or to participate in or access programs and activities. Under Section 504,
reasonable accommodations may also include a structural change to a unit, or to a public or
common use area. In addition, the PHAs/MFH Owners must provide effective communication to
persons with disabilities, including those with vision, hearing, and other communication-related
disabilities, which includes ensuring that information is provided in appropriate accessible
formats as needed (e.g., Braille, audio, large type, assistive listening devices, sign language
interpreters, accessible Web sites; and other accessible electronic communications). See 24 CFR
§ 8.6.
50
PHAs/MFH Owners must also take reasonable steps to ensure meaningful access for persons
with limited English proficiency (LEP). LEP guidance and LEP information is available here:
https://www.federalregister.gov/documents/2007/01/22/07-217/final-guidance-
tofederalfinancial-assistance-recipients-regarding-title-vi-prohibition-against.
In addition, PHAs/MFH Owners must comply with the Violence Against Women Act (VAWA),
HUD’s implementing VAWA regulation at 24 CFR part 5 – subpart L, and applicable program
regulations.
51
ATTACHMENT E: TOPIC: HOUSEHOLD COMPOSITION
Regulations
24 CFR §§ 5.403; 5.603; 5.609; 891.105; and 891.520
Applicable Programs
HUD Multifamily Housing HUD Multifamily Housing Public and Indian Housing
Section 8 (Project Based Rental Section 202/162 PAC, Section HCV (including Project-Based
Assistance), Section 202/8 202/811 PRAC, Section 236 IRP, vouchers), Public Housing, Section
Section 811 PRA 8 Moderate Rehabilitation, Section
8 Moderate Rehabilitation SRO
Yes YesE1 Yes
Summary
See subtopics.
Subtopics
E.1 Definition of Family
Regulation: 24 CFR § 5.403
Summary: The final rule revises the definition of family to also include a single person
who:
Is an otherwise eligible youth who has attained at least 18 years of age and not more
than 24 years of age;
Has left foster care, or will leave foster care within 90 days, in accordance with a
transition plan described in section 475(5)(H) of the Social Security Act (42 U.S.C.
675(5)(H)); and
Is homeless or is at risk of becoming homeless at age 16 or older.
The definition of “family” in the final rule incorporates revisions made to the 1937 Act
by the Fostering Stable Housing Opportunities provisions of the Consolidated
Appropriations Act, 2021, which expands the definition of “single persons.” Due to the
modification of the statute prior to this final rule, HUD is making a conforming change to
24 CFR § 5.403 to align with the new statutory language.
PHA/MFH Owner Discretion: None.
E.2 New Definitions of Foster Adult and Foster Child
Regulation: 24 CFR § 5.603
Summary: The final rule establishes definitions for “foster adult” and “foster child.” A
foster adult is defined as a member of the household who is 18 years or older and meets
E1
SPRACs have a program-specific definition of Family found in paragraph 2.3 (Families to be Housed) of the
SPRAC II (form HUD–93742a).
52
the definition of a foster adult under state law. State-level agencies define who is
considered a foster adult/child, so the classification may vary from state to state.
In general, a foster adult is unable to live independently due to a debilitating physical or
mental condition and is placed with the family by an authorized placement agency or by
judgment, decree, or other order of any court of competent jurisdiction.
A foster child is defined as a member of the household who meets the definition of a
foster child under state law. In general, a foster child is placed with the family by an
authorized placement agency (e.g., public child welfare agency) or by judgment, decree,
or other order of any court of competent jurisdiction.
Foster adults/children are not considered family members and must not be included in
calculations of income for eligibility and rent determination purposes. However, foster
adults/children are considered household members and must be included when
determining unit size or subsidy standards based on established policies.
The definition of “dependent” under § 5.603 was revised to explicitly exclude foster
children and foster adults. PHAs/MFH Owners may not provide a dependent deduction
under § 5.611(a) for a foster child or foster adult. Consistent with the determination that
foster adults/children are not family members, income earned by foster adults/children,
payments received for the care of foster adults/children, and expenses incurred related to
foster adults/children are not considered to be family income or family expenses used in
the determination of annual income. Reasonable unreimbursed child-care expenses (as
defined in § 5.603) for foster children under 13 years of age may be deducted from
annual income if those expenses are necessary to enable a member of the family to work,
look for work, or to further their education, but only if the unreimbursed child-care
expense for the care of the foster child is paid from the family’s annual income (and not
another source, such as a stipend from a child welfare agency). PHAs may use their
discretion to establish permissive deductions pursuant to 24 CFR 5.611(b) related to
foster children and foster adults – for example, to allow unreimbursed health and medical
expenses (defined in § 5.603) of an elderly or disabled family related to their foster child
or foster adult to be deducted from annual income, so long as the expenses are paid from
the elderly or disabled family’s annual income (and not another source, such as a stipend
from a child welfare agency). MFH Owners are not permitted to adopt permissive
deductions (see section C.7 for information on permissive deductions).
Families may be eligible to continue to receive the child-care expense deduction,
pursuant to a hardship exemption, when the unreimbursed child-care expense is for the
care of a foster child under the age of 13, but only if the unreimbursed child-care expense
for the care of the foster child is paid from the family’s annual income (and not another
source, such as a stipend from a child welfare agency). See Attachment C (paragraph
C.5) (Child-Care Expenses Deduction and Hardship Exemption to Continue Child-Care
Expenses Deduction) of this notice.
When a member of an assisted family is temporarily placed in foster care (as confirmed
by the state child welfare agency), the member is still counted as a family member in the
unit from which they were removed. This means that a foster child or foster adult could
be considered an assisted family member in one household while also being a foster child
53
or adult in another household and receiving consideration in both families’ voucher size
and/or unit size.
PHA/MFH Owner Discretion: None.
E.3 Alignment of Family Member Definition Across Programs
Regulations: 24 CFR §§ 5.403; 5.603; and 5.609
Summary: Since approximately 2008, MFH programs have treated foster children and
foster adults as family members. Effective with the final rule, foster children and foster
adults will be treated as household members in MFH programs. This policy alignment is
not a direct result of HOTMA but serves rather to conform MFH programs with the
existing treatment of foster children/adults across other HUD programs.
HUD reminds PHAs and MFH Owners that the income and net family assets of
household members are excluded when determining initial eligibility or eligibility for
continued assistance; however, household members are considered for purposes of unit
size and subsidy standards. For example, a live-in aide must be considered for bedroom
size requirements for a unit, but their income and expenses would not be included for the
purposes of income eligibility and assistance levels. Household members do not qualify
for expenses or deductions, except that reasonable unreimbursed child-care expenses may
be deducted for foster children under the age of 13 if it enables a member of the family to
work, look for work, or go to school, and only if the unreimbursed child-care expense for
the care of the foster child is paid from the family’s annual income (and not another
source, such as a stipend from a child welfare agency).
PHA/MFH Owner Discretion: None.
54
ATTACHMENT F: TOPIC: INCOME
Regulations
24 CFR §§ 5.100; 5.603; 5.603(b); 5.603(b)(3) – (b)(4); 5.609; 5.609(a)(1) – (a)(2); 5.618;
882.515(a); 882.808(i)(1); 891.105; 891.655; 960.259(c)(2); and 982.516(a)(3)
Applicable Programs
HUD Multifamily Housing HUD Multifamily Housing Public and Indian Housing
Section 8 (Project Based Rental Section 202/162 PAC, Section HCV (including Project-Based
Assistance) 202/8, Section 202/811 PRAC, vouchers), Public Housing, Section
Section 236 IRP, Section 811 PRA, 8 Moderate Rehabilitation, Section
SPRAC 8 Moderate Rehabilitation SRO
Yes Yes Yes
Summary
See subtopics.
Subtopics
F.1 Annual Income
Regulations: 24 CFR §§ 5.609(a)(1)–(a)(2); and 891.105
Summary: Annual income includes all amounts received from all sources by each
member of the family who is 18 years of age or older, the head of household, or spouse of
the head of household, in addition to unearned income received by or on behalf of each
dependent who is under 18 years of age. Annual income does not include amounts
specifically excluded in paragraph (b) of 24 CFR § 5.609. See Attachment G (Income
Exclusions). All amounts received by the head of household, co-head, or spouse,
including the income of a day laborer, independent contractor, and seasonal worker (see
paragraphs F.2.a, F.2.b, and F.2.c, below) are included in annual income regardless of
age, unless otherwise excluded in paragraph (b) of 24 CFR § 5.609.
Note: Annual income includes “all amounts received,” not the amount that a family may
be legally entitled to receive but did not . For example, a family’s child-support or
alimony income must be based on payments received, not the amounts the family is
entitled to receive based on any court or agency order. A copy of a court order or other
written payment agreement alone may not be sufficient verification of amounts received
by a family. However, when a family member’s wages or benefits are garnished, levied,
or withheldF1 to pay restitution, child support, tax debt, student loan debt, or other
applicable debts, PHAs/MFH Owners must use the gross amount of the income, prior to
the reduction, to determine a family’s annual income.
F1
See: https://www.dol.gov/general/topic/wages/garnishments and https://faq.ssa.gov/en-us/Topic/article/KA-
01873.
55
Annual income also includes all actual anticipated income from assets even if the asset is
excluded from net family assets but the income from the asset is not otherwise excluded.
Imputed returns on net family assets are included in annual income only when net family
assets exceed $50,000 (a figure that is annually adjusted for inflation) and actual asset
income cannot be calculated for all assets (see F.6.b, below, for a discussion of scenarios
where income can be calculated for some but not all assets). PHAs/MFH Owners will not
impute income from assets if the total value of net family assets is equal to or less than
$50,000 (as adjusted by inflation). See paragraph F.4.a (Determining Net Family Assets),
below, for the definition of net family assets and paragraph F.6 (Actual and Imputed
Income from Assets).
PHA/MFH Owner Discretion: None.
F.2 Earned Income
Regulation: 24 CFR § 5.100
Summary: Earned Income is defined as income or earnings from wages, tips, salaries,
other employee compensation, and net income from self-employment. Earned income
does not include any pension or annuity, transfer payments (meaning payments made or
income received in which no goods or services are being paid for, such as welfare
assistance, Social Security, and other governmental subsidies/benefits), or any cash or in-
kind benefits.
PHA/MFH Owner Discretion: None.
F.2.a Definition of Day Laborer
Regulation: 24 CFR § 5.603(b)
Summary: A day laborer is defined as an individual hired and paid one day at a
time without an agreement that the individual will be hired or work again in the
future.
Income earned as a day laborer is not considered nonrecurring income under 24
CFR § 5.609(b)(24) (see Attachment G (paragraph G.1) (Nonrecurring Income) of
this notice) and must be included, unless specifically excluded in 24 CFR
§ 5.609(b) (e.g., earnings of full-time students in excess of the dependent
deduction (24 CFR §§ 5.609(b)(3), (b)(14), etc.).
PHA/MFH Owner Discretion: None.
F.2.b Definition of Independent Contractor
Regulation: 24 CFR § 5.603(b)
Summary: An independent contractor is an individual who qualifies as an
independent contractor instead of an employee in accordance with the Internal
Revenue Code federal income tax requirements and whose earnings are
consequently subject to the self-employment tax.
In general, an individual is an independent contractor if they have the right to
control or direct only the conduct of the work. For example, while instructions
and route information are generally provided, third-party delivery and
56
transportation service providers are considered independent contractors unless
state law dictates otherwise. In addition, individuals considered “gig workers,”
such as babysitters, landscapers, rideshare drivers, and house cleaners, typically
fall into the category of independent contractor.
Income earned as an independent contractor is not considered nonrecurring
income (see Attachment G (paragraph G.1) (Nonrecurring Income)) and must be
included unless specifically excluded in 24 CFR § 5.609(b) (e.g., 24 CFR
§§ 5.609(b)(3), (b)(14), etc.).
PHA/MFH Owner Discretion: None.
F.2.c Definition of Seasonal Worker
Regulation: 24 CFR § 5.603(b)
Summary: A seasonal worker is defined as an individual who is: 1) hired into a
short-term position (e.g., for which the customary employment period for the
position is 6 months or fewer); and 2) the employment begins about the same time
each year (such as summer or winter). Typically, the individual is hired to address
seasonal demands that arise for the employer or industry.
Some examples of seasonal work include employment limited to holidays or
agricultural seasons. Seasonal work may include but is not limited to employment
as a lifeguard, ballpark vendor, or snowplow driver.
Income earned as a seasonal worker is not considered nonrecurring income (see
Attachment G (paragraph G.1) (Nonrecurring Income)) and must be included
unless specifically excluded in 24 CFR § 5.609(b) (e.g., § 5.609(b)(14), etc.).
PHA/MFH Owner Discretion: None.
F.3 Definition of Unearned Income
Regulation: 24 CFR § 5.100
Summary: Unearned income means any annual income, as calculated under 24 CFR
§ 5.609, that is not earned income.
PHA/MFH Owner Discretion: None.
F.4 Assets
Asset requirements in 24 CFR §§ 5.603 and 5.609 apply to HCV (including Project-
Based Vouchers and all special purpose vouchers), Public Housing, Section 8 Moderate
Rehabilitation, Section 8 Moderate Rehabilitation SRO, and MFH programs.
F.4.a Determining Net Family Assets
Regulations: 24 CFR §§ 5.100 and 5.603
Summary: Net family assets are defined as the net cash value of all assets owned
by the family, after deducting reasonable costs that would be incurred in
disposing of real property, savings, stocks, bonds, and other forms of investment,
except as excluded (see Attachment F (paragraph F.4.b) (Exclusions from Net
Family Assets) of this notice).
57
Assets with negative equity. The cash value of real propertyF2 or other assets with
negative equity would be considered $0 for the purposes of calculating net family
assets. Negative equity in real property or other investments does not prohibit the
family from selling the property or other investments, so negative equity alone
would not justify excluding the property or other investments from family assets.
Assets disposed of for less than fair market value. In determining the value of net
family assets, PHAs/MFH Owners must include the value of any business or
family assets disposed of by an applicant or tenant for less than fair market value
(including a disposition in trust,F3 but not in a foreclosure or bankruptcy sale)
during the two years preceding the date of application for the program or
reexamination, as applicable, in excess of the consideration received.
For example, if a family gave away a home with a net value of $80,000, the value
of the home must be included in the calculation of net family assets for two years
following the transfer of property. If a family sold a home for less than fair market
value, the difference between the value and the amount for which they sold it
would be included in net family assets for two years following the transfer of
property. For example, if a family sold a property with a fair market value of
$80,000 to a friend for $20,000, then the difference in value ($60,000) minus the
cost to dispose of the property ($10,000), which is in this example totals $50,000,
would be counted in net family assets for two years from the date of the
property’s transfer to the other party.
An asset moved to a retirement account held by a member of the family is not
considered to be an asset disposed of for less than fair market value. In the case of
a disposition as part of a separation or divorce settlement, the disposition will not
be considered less than fair market value if the applicant or tenant receives
consideration not measurable in dollar terms.
Asset owned by business entity. If a business entity (e.g., limited liability
company or limited partnership) owns the asset, then the family’s asset is their
ownership stake in the business, not some portion of the business’s assets.
However, if the family holds the assets in their own name (e.g., they own one-
third of a restaurant) rather than in the name of a business entity, then the
percentage value of the asset owned by the family is what is counted toward net
family assets (e.g., one-third of the value of the restaurant).
Jointly owned assets. For assets jointly owned by the family and one or more
individuals outside of the assisted family, PHAs/MFH Owners must include the
total value of the asset in the calculation of net family assets, unless the asset is
otherwise excluded (see F.4.b of this notice), or unless the assisted family can
demonstrate that the asset is inaccessible to them, or that they cannot dispose of
F2
Real property, as used in 24 CFR Part 5, has the same meaning as that provided under the state law in which the
real property is located.
F3
A disposition in trust is when the family creates a trust for the benefit of someone outside of the assisted family. It
would not be considered an asset disposed of for less than fair market value if the family establishes a nonrevocable
trust for the benefit of someone in the assisted family.
58
any portion of the asset without the consent of another owner who refuses to
comply. If the family demonstrates that they can only access a portion of an asset,
then only that portion’s value shall be included in the calculation of net family
assets for the family. Likewise, any income from a jointly owned asset must be
included in annual income, unless that income is specifically excluded (see
Attachment G), or unless the family demonstrates that they do not have access to
the income from that asset, or that they only have access to a portion of the
income from that asset.
If an individual is a beneficiary who is entitled to access the account’s funds only
upon the death of the account’s owner, and may not otherwise withdraw funds
from an account, then the account is not an asset to the assisted family, and the
family should provide proper documentation demonstrating that they are only a
beneficiary on the account.
PHA/MFH Owner Discretion: None.
F.4.b Exclusions from Net Family Assets
Regulations: 24 CFR § 5.603(b)(3)–(b)(4)
Required exclusions from net family assets include the following:
The value of necessary items of personal property. (See paragraph F.4.c
(Necessary and Non-Necessary Personal Property) of this notice.)
The value of all non-necessary items of personal property with a total
combined value of $50,000 or less, annually adjusted for inflation. (See
paragraph F.4.c (Necessary and Non-Necessary Personal Property) of this
notice.)
The value of any account under a retirement plan recognized as such by the
Internal Revenue Service, including Individual Retirement Accounts (IRAs),
employer retirement plans (e.g., 401(k), 403(b)), and retirement plans for self-
employed individuals.
The value of real property that the family does not have the effective legal
authority to sell in the jurisdiction in which the property is located. Examples
of this include but are not limited to: co-ownership situations (including
situations where one owner is a victim of domestic violence), where one party
cannot unilaterally sell the real property; property that is tied up in litigation;
inherited property in dispute.
Any amounts recovered in any civil action or settlement based on a claim of
malpractice, negligence, or other breach of duty owed to a family member
arising out of law that resulted in a member of the family being a person with
disabilities.
The value of any Coverdell education savings account under section 530 of
the Internal Revenue Code of 1986; the value of any qualified tuition program
under section 529 of such Code; and the amounts in, contributions to, and
59
distributions from any Achieving a Better Life Experience (ABLE) account
authorized under section 529A of such code.
The value of any “baby bond” account created, authorized, or funded by the
federal, state, or local government (money held in trust by the government for
children until they are adults).
Interests in Indian trust land.
Equity in a manufactured home where the family receives assistance under 24
CFR Part 982.
Equity in property under the Homeownership Option for which a family
receives assistance under 24 CFR Part 982.
Family Self-Sufficiency accounts.
Federal tax refunds or refundable tax credits for a period of 12 months after
receipt by the family.
The full amount of assets held in an irrevocable trust. (See paragraph F.4.d
(Trusts) of this notice.)
The full amount of assets held in a revocable trust where a member of the
family is the beneficiary, but the grantor/owner and trustee of the trust is not a
member of the participant family or household. (See paragraph F.4.d (Trusts)
of this notice)
PHA/MFH Owner Discretion: PHAs/MFH Owners may need to revise
application forms, interview guides and individual verification forms to ensure
that they are gathering adequate information to make appropriate asset exclusion
determinations.
F.4.c Necessary and Non-Necessary Personal Property
Regulation: 24 CFR § 5.603
Summary: Necessary personal property is excluded from net family assets. Non-
necessary personal property with a combined value greater than $50,000, as
adjusted by inflation, is considered part of net family assets. When the combined
value of all non-necessary personal property does not exceed $50,000, as adjusted
by inflation, all non-necessary personal property is excluded from net family
assets.
All assets are categorized as either real property (e.g., land, a home) or personal
property. Personal property includes tangible items, like boats, as well as
intangible items, like bank accounts. For example, a family could have non-
necessary personal property with a combined value that does not exceed $50,000
but also own real property such as a parcel of land. Even though the non-
necessary personal property would be excluded from net family assets, the real
property would be included in net family assets regardless of its value unless the
real property meets a different exclusion under 24 CFR § 5.603.
60
Necessary personal property are items essential to the family for the maintenance,
use, and occupancy of the premises as a home; or they are necessary for
employment, education, or health and wellness. Necessary personal property
includes more than merely items that are indispensable to the bare existence of the
family. It may include personal effects (such as items that are ordinarily worn or
utilized by the individual), items that are convenient or useful to a reasonable
existence, and items that support and facilitate daily life within the family’s home.
Necessary personal property also includes items that assist a household member
with a disability, including any items related to disability-related needs, or that
may be required for a reasonable accommodation for a person with a disability.
Necessary personal property does not include bank accounts, other financial
investments, or luxury items.
Determining what is a necessary item of personal property is a highly fact-specific
determination, and therefore it is incumbent on PHAs/MFH Owners to gather
enough facts to qualify whether an asset is necessary or non-necessary personal
property.
Items of personal property that do not qualify as necessary personal property will
be classified as non-necessary personal property.
The following table lists examples of necessary and non-necessary personal
property. This is not an exhaustive list.
Table F1: Examples of Necessary and Non-Necessary Personal Property
Necessary Personal Property Non-Necessary Personal Property
Car(s)/vehicle(s) that a family relies on for Recreational car/vehicle not needed for day-
transportation for personal or business use to-day transportation (campers,
(e.g., bike, motorcycle, skateboard, scooter) motorhomes, travel trailers, all-terrain
vehicles (ATVs))
Furniture, carpets, linens, kitchenware
Bank accounts or other financial investments
Common appliances (e.g., checking account, savings account,
Common electronics (e.g., radio, television, stocks/bonds)
DVD player, gaming system) Recreational boat/watercraft
Clothing Expensive jewelry without religious or
Personal effects that are not luxury items cultural value, or which does not hold family
(e.g., toys, books) significance
Wedding and engagement rings Collectibles (e.g., coins/stamps)
Jewelry used in religious/cultural Equipment/machinery that is not used to
celebrations and ceremonies generate income for a business
Religious and cultural items Items such as gems/precious metals,
antique cars, artwork, etc.
Medical equipment and supplies
Health care–related supplies
Musical instruments used by the family
61
Personal computers, phones, tablets, and
related equipment
Professional tools of trade of the family, for
example professional books
Educational materials and equipment used
by the family, including equipment to
accommodate persons with disabilities
Equipment used for exercising (e.g.,
treadmill, stationary bike, kayak,
paddleboard, ski equipment)
62
Example F1: Necessary and Non-Necessary Personal Property
The Cross family owns three items of personal property. The family has a checking account valued at
$5,000, a $15,000 recreational boat, and Ms. Cross’s $3,000 engagement ring.
The checking account and recreational boat are both considered non-necessary personal property.
They are worth a combined $20,000. The engagement ring is considered necessary personal property,
because it is jewelry used in a religious/cultural celebration or ceremony. Since the total value of non-
necessary personal property is less than $50,000, the family’s non-necessary personal property will
not be considered when calculating the Cross family’s net family assets.
Cross Family’s Personal Property
Amount to be
considered as non-
Item Estimated Value Type
necessary personal
property
Non-necessary
Checking account $5,000 $5,000
Personal Property
Necessary Personal
Ring (engagement ring) $3,000 $0
Property
Non-necessary
Recreational boat $15,000 $15,000
Personal Property
Total Non-necessary Personal Property: $20,000
Calculation of Cross Family’s Total Net Assets
Asset Total to be Considered in Net Family Assets
Non-necessary Personal Property $0
Real Property $0
Total: $0
The Cross family’s total net family assets are $0.
PHA/MFH Owner Discretion: None.
F.4.d Trusts
Regulations: 24 CFR §§ 5.603 and 5.609
Summary: Whether the value of a trust counts as a net family asset and whether
distributions from the trust count as annual income to the family depends on the
following three factors:
Whether the trust is under the control of the family;
Whether distributions are made from the trust’s principal; and
63
The purpose of the distribution, if the distribution is made from income earned
on the trust’s principal.
F.4.d.i Trusts as Net Family Assets
The value of irrevocable trusts and revocable trusts that are not under the
control of the family are both excluded from net family assets.
The distinguishing feature of a revocable trust is that the grantor can
terminate and/or amend the trust at any time for any reason before his or
her death. In circumstances when a member of the assisted family is the
beneficiary of a revocable trust, but the grantor is not a member of the
assisted family, the beneficiary does not “own” the revocable trust, and
the value of the trust is excluded from net family assets. For the
revocable trust to be considered excluded from net family assets, no
family or household member may be the account’s trustee.
A revocable trust that is under the control of the family or household
(e.g., the grantor is a member of the assisted family or household) is
included in net family assets, and, therefore, income earned on the trust
is included in the family’s income from assets. This also means that
PHAs/MFH Owners will calculate imputed income on the revocable
trust if net family assets are more than $50,000, as adjusted by inflation,
and actual income from the trust cannot be calculated (e.g., if the trust is
comprised of farmland that is not in use).
F.4.d.ii Actual Income from a Trust
If the PHA/MFH Owner determines that the revocable trust is included
in the calculation of net family assets, then the actual income earned by
the revocable trust is also included in the family’s income.
Where an irrevocable trust is excluded from net family assets, the
PHA/MFH Owner must not consider actual income earned by the trust
(e.g., interest earned, rental income if property is held in the trust) for so
long as the income from the trust is not distributed.
F.4.d.iii Trust Distributions and Annual Income
Revocable trust considered part of net family assets: If the value
of the trust is considered part of the family’s net assets, then
distributions from the trust are not considered income to the family.
Revocable or irrevocable trust not considered part of net family
assets: If the value of the trust is not considered part of the family’s
net assets, then distributions from the trust are treated as follows:
All distributions from the trust’s principal are excluded from
income.
Distributions of income earned by the trust (i.e., interest,
dividends, realized gains, or other earnings on the trust’s
64
principal), are included as income unless the distribution is used
to pay for the health and medical expenses for a minor.
Table F2 below is a tool to assist PHAs/MFH Owners in determining whether a
trust should be considered a net family asset and/or whether a trust’s earned
interest or distributions are considered income to the family.
Table F2: Annual Income/Net Family Assets Scenarios based on Trust Type
Are distributions
Is the actual
Are distributions of interest
Is the trust interest earned
of trust principal earned on the
Trust Type considered a net by the trust
considered trust principal
family asset? considered
family income? considered
family income?
family income?
Revocable
Grantor is not part
of the assisted Yes, unless the
family or distributions are
household (and used to pay for
No No No
the family or the health and
household is not medical expenses
otherwise in for a minor
control of the
trust)
Revocable
Grantor is part of
the assisted family
or household (or
the trust is Yes Yes No No
otherwise under
the control of the
family or
household)
Yes, unless the
Irrevocable distributions are
(Typically, Special used to pay for
No No No
Needs Trusts are the health and
irrevocable.) medical expenses
for a minor
PHAs/MFH Owners must be careful to distinguish between distributions of
principal and distributions of earnings on a trust’s principal when verifying family
income from irrevocable trusts and revocable trusts where the grantor is not part
of the assisted family or household, so as not to unintentionally include
distributions of principal that are not considered income.
Note: The policy implemented under HOTMA is a change from the previous
policies of both PIH and MFH. Previously, PIH considered all distributions of
principal or income earned on the principal as income unless the distribution
65
qualified as an income exclusion. In determining whether a distribution from a
trust should be counted as income to the beneficiary, MFH considered how the
trust was funded, whether the distribution was from trust income or principal, and
whether any distribution from trust income met an existing income exclusion. The
policy under HOTMA aligns the policies of MFH and PIH and clarifies that the
term “income” means “trust income” and not any distribution from the trust to the
beneficiary.
PHA/MFH Owner Discretion: None.
F.4.e Federal Tax Refunds or Refundable Tax Credits
Regulation: 24 CFR § 5.603
Summary: All amounts received by a family in the form of federal tax refunds or
refundable tax credits are excluded from a family’s net family assets for a period
of 12 months after receipt by the family.
Taxpayers have several options for receiving their tax refunds: via paper check or
direct deposit into a checking or savings account; via TreasuryDirect to buy
savings bonds; via direct deposit into a Traditional, Roth, or Simplified Employee
Pension Plan-IRA; or via purchase of savings bonds, a Health Savings Account,
an Archer Medical Savings Account, or a Coverdell Education Savings Account.
Refundable tax credits, such as the Earned Income Tax Credit (EITC), are
determined as part of an overall tax return submission to the Internal Revenue
Service (IRS). Taxpayers receive one federal tax refund reflecting the taxpayer’s
tax liability, if negative, including any applicable refundable tax credits.
At the time of an annual or interim reexamination of income, if the federal tax
refund was received during the 12 months preceding the effective date of the
reexamination, then the amount of the refund that was received by the family is
subtracted from the total value of net family assets. When the subtraction results
in a negative number, then net family assets are considered $0.
Note: Only the amount that the family receives is excluded from net family assets.
For example, if a family anticipates a $500 federal tax refund but only receives
$250, then only $250 will be excluded from the net family assets because that is
the amount that the family received.
PHAs/MFH Owners are not required to verify the amount of the family’s federal
tax refund or refundable tax credit(s) if the family’s net assets are equal to or
below $50,000 (adjusted annually for inflation), even in years when full
verification of assets is required or if the PHA/MFH owner does not accept self-
certification of assets. PHAs/MFH Owner must verify the amount of the family’s
federal tax refund or refundable tax credits if the family’s net assets are greater
than $50,000.
The anticipated income earned by the assets in which a family has deposited their
federal tax refund or refundable tax credits must be included in the family’s
annual income unless the income is specifically excluded under 24 CFR
§ 5.609(b).
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Example F2: Federal Tax Refund Excluded from Net Family Assets
The Rodriguez family received a $4,500 federal tax refund on 3/1/2024 and deposited the refund into
their checking account. At their next annual reexamination with an effective date of 8/1/2024, the
PHA/MFH Owner asks the family about any assets they own, the anticipated income from the assets,
and if they received a federal tax refund or refundable tax credits in the past 12 months and where they
deposited the refund/refundable tax credits or if they purchased savings bonds with the refund.
The Rodriguez family explain that they received a $4,500 refund and that they deposited the refund
into their checking account, which has a balance of $10,000. The Rodriguez family reports that they
have actual income of $100 from the checking account this year. The family owns no other assets.
Therefore, the family’s total calculation of net family assets is $10,000. In determining the total value of
net family assets, the PHA/MFH Owner subtracts $4,500 from the total of $10,000 of net family assets,
for a total countable asset of $5,500. The full value of actual income is included as income, because
actual income is always included even on excluded assets.
F.4.f Net Family Assets Examples
In some cases, amounts that are excluded from net family assets may be included
as annual income when disbursements are made to a family from an asset. In
other cases, amounts are excluded from annual income as a lump-sum addition to
net family assets, but those funds are then considered a net family asset if held in
an account or other investment that is considered part of net family assets. These
concepts are illustrated in the three examples below.
Example F3: Retirement Accounts
Background: The value of any account under a retirement plan recognized by the Internal Revenue
Service, including IRAs, employer retirement plans, and retirement plans for self-employed individuals,
is not considered in determining net family assets. Any income earned on the funds while stored in
such a retirement account is not considered actual income from assets. However, any distribution of
periodic payments from the retirement account is considered income at the time it is received by the
family (§ 5.609(b)(26)).
Scenario
Prior quarter ending balance of 401(k) account: $157,500
Prior quarter yield: 5 percent ($7,500)
Distributions made to family: $12,000 in prior year, same amount is anticipated to be received this year.
Result: In this example, the family’s income reexamination will not include the 401(k), because the
value of the 401(k) and the earnings will be considered neither net family assets nor income to the
family; however, the family’s income reexamination will include the $12,000 in distributions (unearned
income) which has been paid from the retirement account in increments of $1,000 monthly to the
family.
Example F4: Civil Rights Settlements
Background: A civil rights settlement, regardless of how the settlement is paid (lump sum or several
distributions), is excluded from annual income; however, the amounts would be considered part of net
family assets, if held in a savings account, revocable trust, or in some other asset that is not excluded
from the definition of net family assets.
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Scenario
Jessica receives a civil rights settlement in the amount of $20,000, because she was not provided a
reasonable accommodation. Jessica deposits the $20,000 into her savings account, which already
contains $5,000, and earns 0.5 percent interest annually.
Total civil rights settlement received: $20,000 (excluded from income under § 5.609(b)(25))
Value of savings account: $25,000 (which includes the $20,000 settlement)
Actual income earned from savings account: $25,000 x 0.005 = $125 included in annual income
Result: In this example, the family’s income reexamination will not include the amount received from
the civil rights settlement, because the funds are not considered income under § 5.609(b)(25).
However, the value of the savings account where the settlement was deposited will be used in the
calculation of net family assets, and the actual income earned from interest accrual (as self-certified by
the family) will be included in the family’s annual income.
Example F5: Life Insurance
Background: The cash value of life insurance policies that are available to the participant before death
are included in net family assets (e.g., the surrender value of a whole life policy or a universal life
policy). Net family assets will not include the value of term life insurance, which has no cash value to
the individual before death.
Scenario A: The Johnson family has a whole life insurance policy with a face value of $100,000 and a
surrender value of $30,000. Net family assets will include $30,000 for the life insurance policy. The
Johnson’s family policy also pays an annual dividend of $100. This will be included as actual income.
Scenario B: The Dexter family has a term life insurance policy with a face value of $100,000 payable
upon death. The total amount included in the family’s net family assets for this insurance policy will be
$0.
F.5 Passbook Rate
Regulation: 24 CFR § 5.609(a)(2)
Summary: HUD will annually publish a passbook rate based on the Federal Deposit
Insurance Corporation (FDIC) National Deposit Rate for savings accounts, which is an
average of national savings rates published on a monthly basis. PHAs/MFH Owners must
use the HUD-published passbook rate when calculating imputed asset income for net
family assets that exceed $50,000 (a figure that is annually adjusted for inflation). The
HUD-published passbook rate will be posted to a dataset on the HUD User Web site,
alongside annual inflationary adjustments (see Attachment H).
To determine the passbook rate for the next calendar year, HUD will average the most
recent three months of FDIC updates to the National Deposit Rate for savings accounts,
rounded to the nearest hundredth of 1 percent. In order to ensure updated passbook rates
may be used for reexaminations with an effective date of January 1, HUD will calculate
the update in July each year, using FDIC data from April, May, and June for publication
on HUD User not later than September 1.
For 2024, the passbook rate will be 0.40 percent. Below is an explanation of how the
passbook rate was calculated for 2024. For reexaminations that occur after January 1,
2024, but before the date on which the PHA/MFH Owner implements the new passbook
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rate, PHAs may continue to set their own passbook rates, and MFH Owners must
continue to use the 0.06 percent passbook rate. PHAs may also choose to implement the
2024 HUD passbook rate before complying with HOTMA as they have the flexibility to
set their own passbook rate.
Table F3: Calculation of Passbook Rate for 2024
FDIC Monthly Update, Date of Publication National Deposit Rate, Savings Accounts
4/17/2023 0.39 percent
5/15/2023 0.40 percent
6/20/2023 0.42 percent
HUD Passbook Rate (average of 3 months of
0.40 percent
FDIC National Deposit Rates)
PHA/MFH Owner Discretion: None. PHAs were previously permitted to set their own
passbook rates within a HUD-published range; effective with the final rule, PHAs/MFH
Owners will be required to use the HUD-published passbook rate. The final rule
supersedes Notice H 2016–01 (Passbook Saving Rate Effective February 1, 2016).
F.6 Actual and Imputed Income from Assets
Regulation: 24 CFR § 5.609(a)(2)
Summary: Actual income and imputed income are treated as described below.
F.6.a Actual Income
Actual income from assets is always included in a family’s annual income,
regardless of the total value of net family assets or whether the asset itself is
included or excluded from net family assets, unless that income is specifically
excluded by 24 CFR § 5.609(b).
Income or returns from assets are generally considered to be interest, dividend
payments, and other actual income earned on the asset, and not the increase in
market value of the asset. The increase in market value is relevant to the cash
value of the asset for the purpose of determining total net family assets and
imputing income.
The following examples illustrate how to calculate actual income from assets.
Example F6: Actual Asset Income from an Asset Excluded from Net Family Assets
Background: Eugene Park owns a checking account with $3,500 that earns 0 percent interest. He also
has a savings account with a balance of $10,000 for which he expects to earn $300 in annual interest.
Mr. Park has no other assets. Because those assets are classified as non-necessary personal
property, and their combined value of $13,500 does not exceed $50,000, the combined value of all
non-necessary personal property is excluded from the calculation of net family assets (see paragraph
F.4.c (Necessary and Non-Necessary Personal Property) of this notice). The total value of Eugene
Park’s net family assets is $0, and $300 is included in annual income.
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Scenario
Total value of assets: $3,500 + $10,000 = $13,500
Net family assets: $0.00 (total value of assets is less than $50,000, therefore the value is excluded
from net family assets)
Result: Actual income from assets (must be included in the calculation of annual income for Eugene
Park): $300 ($0 from checking account + $300 from savings account)
Example F7: Calculating Net Family Assets and Actual Asset Income
when Net Family Assets Exceed $50,000 (As Adjusted)
Background: Sherry McNeil received a federal tax refund of $1,200 and deposited the refund into her
checking account. At the time of her annual reexamination six months later, the account had a balance
of $10,000 and earns 0-percent interest. Sherry also owns a stock portfolio with a verified value of
$45,000. The stocks earned $405 in cash dividends last year, which Sherry expects to earn again in
the coming year.
Scenario
Total value of assets: $55,000 ($10,000 + $45,000)
Net family assets: $53,800 ($55,000 – $1200) (tax refund received in the last 12 months is excluded
from net family assets under § 5.603(b)(3)(xi).) Because the total value of Sherry’s non-excluded
assets exceeds $50,000, this value ($53,800) is included as net family assets and must be confirmed
via third-party verification.
Actual Income from Checking Account: $0 earned ($10,000 x 0 percent)
Actual Income from Stock Portfolio: $405 earned in dividends last year on $45,000
Result: Total actual income from assets (must be included in the calculation of annual income for
Sherry McNeil): $405 ($0 + $405)
F.6.b Imputed Income
Imputed income from assets is no longer determined based on the greater of
actual or imputed income from the assets. Instead, imputed asset income must be
calculated for specific assets when three conditions are met:
The value of net family assets exceeds $50,000 (as adjusted for inflation);
The specific asset is included in net family assets; and
Actual asset income cannot be calculated for the specific asset.
Imputed asset income is calculated by multiplying the net cash value of the asset,
after deducting reasonable costs that would be incurred in disposing of the asset,
by the HUD-published passbook rate (see Table F3 above). If the actual income
from assets can be computed for some assets but not all assets, then PHAs/MFH
Owners must add up the actual income from the assets, where actual income can
be calculated, then calculate the imputed income for the assets where actual
income could not be calculated. After the PHA/MFH owner has calculated both
the actual income and imputed income, the housing provider must combine both
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amounts to account for income on net family assets with a combined value of over
$50,000.
When the family’s net family assets do not exceed $50,000 (as adjusted for
inflation), imputed income is not calculated. Imputed asset income is never
calculated on assets that are excluded from net family assets. When actual income
for an asset — which can equal $0 — can be calculated, imputed income is not
calculated for that asset.
Example F8: Combining Actual and Imputed Asset Income
Background: The Jorgensen family owns a small piece of vacant land with a cash value of $25,000.
The family also owns a savings account with a verified balance of $55,000, with an interest rate of 0
percent. The family’s total net assets are $80,000. The PHA/MFH Owner can calculate the actual
income of the savings account as $0, as seen below. The PHA/MFH Owner is unable to calculate the
actual income earned for the property owned by the family, because the property neither generates any
income for them nor could an income amount be computed as a matter of interest or dividend earnings.
Therefore, imputed asset income for the real property must be calculated. The passbook savings rate
in effect is 0.10 percent.
Scenario
Actual Income from savings account: $55,000 x 0 percent = $0 actual income of savings account
Imputed income from family’s property: $25,000 x 0.001= $25 imputed income
Result: Total asset income (must be included in the calculation of annual income for the Jorgensen
family): $25 ($0 + $25)
PHAs/MFH Owners should not conflate an asset with an actual return of $0 (as in
the example above), with an asset for which an actual return cannot be computed,
such as could be the case for some non-financial assets that are items of non-
necessary personal property. If the asset is a financial asset and there is no income
generated (for example, a bank account with a 0 percent interest rate or a stock
that does not issue cash dividends), then the asset generates zero actual asset
income, and imputed income is not calculated. When a stock issues dividends in
some years but not others (e.g., due to market performance), the dividend is
counted as the actual return when it is issued, and when no dividend is issued, the
actual return is $0. When the stock never issues dividends, the actual return is
consistently $0.
Example F9: Imputing Income when Actual Income Cannot Be Calculated
Background: The Conrad family owns a recreational boat with a Kelley Blue Book value of $15,000.
They also own a checking account with $10,000 that earns 0 percent interest and a savings account
with $30,000 that earns 3 percent interest, putting their net family assets value at $55,000. No actual
returns on the boat can be computed, however actual income can be calculated for the savings
account. The passbook savings rate in effect is 0.10 percent.
Scenario
Actual income from assets: $900 (($10,000 x 0 percent) + ($30,000 x 0.03))
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Imputed income from assets: $15 ($15,000 x 0.001)
Result: Total income from assets (must be included in the calculation of annual income for the Conrad
family): $915 ($900 + $15)
The following chart illustrates different net family asset scenarios and whether to
include actual and/or imputed assets in the family’s annual income determination.
Chart F1: Decision Chart for Determining Income from Assets
PHA/MFH Owner Discretion: None.
F.7 Self-Certification of Net Family Assets Equal to or Less Than $50,000 (as adjusted
for inflation)
Regulations: 24 CFR §§ 5.603; 5.609; 5.618; 5.659(e); 882.515(a); 882.808(i)(1);
891.105; 891.655; 960.259(c)(2); and 982.516(a)(3)
Summary: PHAs/MFH Owners may determine net family assets based on a self-
certification by the family that the family’s total assets are equal to or less than $50,000,
adjusted annually for inflation, without taking additional steps to verify the accuracy of
the declaration at admission and/or reexamination. PHAs/MFH Owners are not required
to obtain third-party verification of assets if they accept the family’s self-certification of
net family assets. When PHAs/MFH Owners accept self-certification of net family assets
at reexaminationF4, the PHA/MFH Owner must fully verify the family’s assets every
three years.
F4
See 24 CFR § 5.659(e); 960.259(c)(2); 982.516(a)(3).
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PHAs/MFH Owners may follow a pattern of relying on self-certification for two years in
a row and fully verifying assets in the third year.
The family’s self-certification must state the amount of income the family anticipates
receiving from such assets. The actual income declared by the family must be included in
the family’s income, unless specifically excluded from income under 24 CFR § 5.609(b).
PHAs/MFH Owners must clarify, during the self-certification process, which assets are
included/excluded from net family assets.
PHAs/MFH Owners may combine the self-certification of net family assets and questions
inquiring about a family’s present ownership interest in any real property into one form.
Example F10: Self-Certification of Net Family Assets
We know from Example F1 that the Cross family’s net family assets are $0. In this case, the checking
account earns 0.07 percent interest annually.
Cross Family’s Personal Property
Amount to be
Considered as Non-
Item Estimated Value Type
Necessary Personal
Property
Non-necessary
Checking account $5,000 $5,000
personal property
Necessary personal
Ring (engagement ring) $3,000 $0
property
Non-necessary
Recreational boat $15,000 $15,000
personal property
Total Non-necessary personal property $20,000
Calculation of Cross Family’s Total Net Assets
Total to be considered in Net
Asset Anticipated Income
Family Assets
Non-necessary Personal
$0 $3.50
Property (Checking Account)
Real Property N/A N/A
Total: $0 $3.50
The PHA/MFH Owner may accept a self-certification of assets from the Cross family if the PHA/MFH
Owner has a policy to do so (see paragraph below this example for PHA/MFH Owner Discretion on
accepting self-certification). The self-certification must include any anticipated income from assets. In
this example, if the PHA/MFH Owner is accepting a self-certification of assets, then the calculations
above would not need to be included on the self-certification form. Only the total anticipated income
from assets must be included on the form.
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Note that in this instance, even though the checking account is excluded from the calculation of net
family assets (because the combined value of non-necessary personal property does not exceed
$50,000), the family must report actual asset income from the checking account (in this case, $3.50).
PHA/MFH Owner Discretion: PHAs/MFH Owners are not required to adopt a policy to
allow for self-certification of net family assets for families with net family assets that are
equal to or below $50,000, adjusted annually for inflation. PHAs/MFH Owners who
choose not to accept self-certifications of assets must verify all families’ assets on an
annual basis. Third-party verification of assets is required when net family assets exceed
$50,000, adjusted annually by HUD.
Accepting a family’s self-certification at admission may reduce the initial burden on
applicants and speed up the lease-up process. In deciding whether to accept a self-
certification of assets at admission, PHAs/MFH Owners are encouraged to consider the
local needs and priorities in their communities along with the potential risks of accepting
self-certification of net family assets, including the requirement to repay funds for
participants/tenants who are later found to be ineligible for assistance.
PHAs/MFH Owners must include in their ACOPs, Administrative Plans, or Tenant
Selection Plans, as applicable, whether and when they accept a self-certification of assets
equal to or less than $50,000, which amount will be adjusted annually by HUD. See
Attachment H (Inflationary Adjustments) of this notice for more information.
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ATTACHMENT G: TOPIC: INCOME EXCLUSIONS
Regulations
24 CFR §§ 5.609(b)(4)–(5); 5.609(b)(7)–(10); 5.609(b)(14)–(15); 5.609(b)(17); 5.609(b)(19)–
(24); 5.609(b)(24)(i)–(vii); 5.609(b)(25); 5.609(b)(27)–(28); 5.611; 891.105 and 891.655
Applicable Programs
HUD Multifamily Housing HUD Multifamily Housing Public and Indian Housing
Section 8 (Project Based Rental Section 202/162 PAC, Section HCV (including Project-Based
Assistance) 202/8, Section 202/811 PRAC, vouchers), Public Housing, Section
Section 236 IRP, Section 811 PRA, 8 Moderate Rehabilitation, Section
SPRAC 8 Moderate Rehabilitation SRO
Yes Yes Yes
Summary
The section below provides descriptions and clarifying information for new and updated income
exclusions referenced in 24 CFR § 5.609(b). Please note that this section does not address all
income exclusions listed in 24 CFR § 5.609(b) but only those that are newly added or updated by
the final rule.
PHAs/MFH Owners must revise their interview guides and individual verification forms to
ensure that adequate information will be collected to make appropriate income exclusion
determinations.
Subtopics
G.1 Nonrecurring Income
Regulation: 24 CFR §§ 5.609(b)(24) and CFR 891.105
Summary: The nonrecurring income exclusion replaces the former exclusion for
temporary, nonrecurring, and sporadic income (including gifts), but it provides a
narrower definition of excluded income in contrast to the former broad exclusion of
temporary, nonrecurring, or sporadic income.
Income that will not be repeated beyond the coming year (i.e., the 12 months following
the effective date of the certification), based on information provided by the family, is
considered nonrecurring income and is excluded from annual income. However, income
received as an independent contractor, day laborer, or seasonal worker is not excluded
from income under § 5.609(b)(24), even if the source, date, or amount of the income
varies.
Income that has a discrete end date and will not be repeated beyond the coming year
during the family’s upcoming annual reexamination period will be excluded from a
family’s annual income as nonrecurring income. This does not include unemployment
income and other types of periodic payments that are received at regular intervals (such
as weekly, monthly, or yearly) for a period of greater than one year that can be extended.
For example, an increasing number of cities and states are piloting guaranteed income
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programs that have discrete beginning and end dates. This income can be excluded as
nonrecurring in the final year of the pilot program. For example, for an annual
reexamination effective 2/1/2024, guaranteed income that will be repeated in the coming
year but will end before the next reexamination on 2/1/2025 will be fully excluded from
annual income.
Income amounts excluded under this category may include, but are not limited to,
nonrecurring payments made to the family or to a third party on behalf of the family to
assist with utilities, eviction prevention, security deposits to secure housing, payments for
participation in research studies depending on the duration, and general one-time
payments received by or on behalf of the family.
The following list of exclusions is codified at 24 CFR § 5.609(b)(24) as nonrecurring
income. Please note that the list is not exhaustive:
Payments from the U.S. Census Bureau for employment lasting no longer than 180
days and not culminating in permanent employment;
Direct federal or state economic stimulus payments;
Amounts directly received by the family as a result of state refundable tax credits or
state tax refunds at the time they are received;
Amounts directly received by the family as a result of federal refundable tax credits
or federal tax refunds at the time they are received;
Gifts for holidays, birthdays, or other significant life events or milestones (e.g.,
wedding, baby shower, or anniversary gifts);
In-kind donations (e.g., food, clothing, or toiletries received from a food bank or
similar organization); and
Lump-sum additions to net family assets (e.g., lottery winnings, contest winnings,
etc.).
PHAs/MFH Owners may accept a self-certification from the family stating that the
income will not be repeated in the coming year.
Example G1: Recurring and Nonrecurring Income
Scenario A: Non-recurring earned income excluded from annual income: Justin Clark worked for
four months over the past year for a company that has since gone out of business. During the Clark
family’s reexamination interview, the PHA/MFH Owner asks Justin whether he expects to work for the
company again in the coming year. Justin provides proof that the company went out of business. The
PHA/MFH Owner must exclude Justin’s earned income received from the company that went out of
business from the family’s annual income.
Scenario B: Recurring earned income included in annual income: Ana Johnson works as an
independent information technology (IT) contractor during various times of the year, when her clients
require additional IT contract support. Ana reasonably believes that she will be contracted again the
following year based on discussions with her clients. The PHA/MFH Owner must include the income
that Ana earns as an IT contractor in the family’s annual income.
Scenario C: Guaranteed Basic Income (GBI) excluded from annual income: Lucretia Jones
reports at her upcoming annual reexamination effective on 5/1/24 that her GBI program will be ending
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on 1/31/25. The PHA/MFH Owner excludes this income because the programs will stop before the next
annual reexamination on 5/1/25. This income must be excluded, because there is a set term for the
program, and the payments will not be repeated beyond the coming year, which is the final year of a
GBI program.
Scenario D: Research stipend included as annual income: Lillian Gonzalez reports at the annual
reexamination that will be effective on 5/1/24 that she receives monthly payments for participation in a
research project that is expected to last for 18 months and will end on 9/30/25. The PHA/MFH Owner
includes this as income because the amounts will be received through the next annual reexamination
on 5/1/25. For the 5/1/25 annual reexamination, the family provides a letter stating that the income will
end on 9/30/25, so the PHA/MFH Owner will exclude the income received after the 5/1/25 annual
reexamination.
PHA/MFH Owner Discretion: None.
G.1.a Nonrecurring Income: Temporary U.S. Census Bureau Employment
Regulation: 24 CFR § 5.609(b)(24)(i)
Summary: Payments from the U.S. Census Bureau for employment relating to
the decennial census or the American Community Survey lasting no longer than
180 days and not culminating in permanent employment are excluded from
annual income. However, it should be noted that any permanent employment with
the U.S. Census Bureau should be considered in the annual income calculation.
PHA/MFH Owner Discretion: None.
G.1.b Nonrecurring Income: Economic Stimulus or Recovery Payments
Regulation: 24 CFR § 5.609(b)(24)(ii)
Summary: Direct federal or state payments intended for economic stimulus or
recovery are excluded from annual income.
HUD will continue to advise PHAs/MFH Owners of which payments are
considered economic stimulus or recovery payments for the purposes of income
calculation.
PHA/MFH Owner Discretion: None.
G.1.c Nonrecurring Income: State Tax Refunds
Regulation: 24 CFR § 5.609(b)(24)(iii)
Summary: Amounts directly received by the family as a result of state refundable
tax credits or state tax refunds at the time they are received are excluded from
annual income.
PHA/MFH Owner Discretion: None.
G.1.d Nonrecurring Income: Federal Tax Refunds
Regulation: 24 CFR § 5.609(b)(24)(iv)
Summary: Amounts directly received by the family as a result of federal
refundable tax credits and federal tax refunds at the time they are received are
excluded from annual income.
PHA/MFH Owner Discretion: None.
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G.1.e Nonrecurring Income: Gifts
Regulation: 24 CFR § 5.609(b)(24)(v)
Summary: Gifts for holidays, birthdays, or other significant life events or
milestones (e.g., weddings, baby showers, anniversaries) are excluded from
annual income.
Example G2: Gifts for Holidays, Birthdays, or
Other Significant Life Events or Milestones
Mariah Smith received a check for $250 on her 25th birthday from her favorite aunt and $30 from her
cousin. These gifts are excluded from annual income.
PHA/MFH Owner Discretion: None.
G.1.f Nonrecurring Income: In-Kind Donations
Regulation: 24 CFR § 5.609(b)(24)(vi)
Summary: Non-monetary in-kind donations, such as food or toiletries, received
from a food bank or similar organization are excluded from annual income. When
calculating annual income, PHAs/MFH Owners are prohibited from assigning
monetary value to non-monetary in-kind donations received by the family from a
food bank or similar organization.
Non-recurring, non-monetary in-kind donations from friends and family may be
excluded as non-recurring income. See (24 CFR § 5.609(b)(24)).
Example G3: In-Kind Donations
Jonas Crandall receives a basket weekly from the local food bank that includes both food and toiletries.
Because this is an in-kind donation from the local food bank, the PHA/MFH Owner must not include the
basket items in the calculation of annual income.
PHA/MFH Owner Discretion: None.
G.2 Lump-Sum Additions to Net Family Assets
Regulation: 24 CFR § 5.609(b)(24)(vii)
Summary: Lump-sum additions to net family assets, including but not limited to lottery
or other contest winnings, are excluded from annual income. These amounts may count
toward net family assets in accordance with 24 CFR § 5.603.
Example G4: Lump-Sum Additions to Net Family Assets
Scenario A: Trevor Lucky bought 10 lottery tickets and discovered that one of the tickets won Trevor
$1,000. Trevor reported his winnings as part of an interim reexamination. The PHA/MFH Owner
determined that the lottery winnings are a one-time, lump-sum addition to net family assets and should
not be included in the annual income calculation.
Scenario B: Logan fundraises $5,000 online to help pay for personal expenses (e.g., “Go Fund Me”).
The PHA/MFH Owner verified with Logan that this was a one-time solicitation for donations of cash and
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that Logan does not intend for this to be a recurring source of income. The $5,000 is a one-time, lump-
sum addition to net family assets and should not be included in the annual income calculation.
Scenario C: At the next annual reexamination, the PHA/MFH Owner determines that Logan solicited
for donations online a second time and raised an additional $4,500. Again, Logan certified that he does
not intend for this to be a recurring source of income, but, because the PHA/MFH Owner can establish
a pattern, the $4,500 is not considered a lump-sum addition to net family assets and should be
included in the annual income calculation.
PHA/MFH Owner Discretion: None.
G.3 Income Earned on Amounts Placed in a Family’s Family Self Sufficiency (FSS)
Account
Regulation: 24 CFR § 5.609(b)(27)
Summary: Income earned on amounts placed in a family’s FSS account is excluded
from the family’s calculation of annual income.
PHA/MFH Owner Discretion: None.
G.4 Income of Live-in Aides, Foster Children, and Foster Adults
Regulation: 24 CFR § 5.609(b)(8)
Summary: Income of a live-in aide, foster child, or foster adult as defined in 24 CFR
§§ 5.403 and 5.603 is excluded from the family’s calculation of annual income.
PHA/MFH Owner Discretion: None.
G.5 Payments Received for the Care of Foster Children or Foster Adults or State or
Tribal Kinship or Guardianship Care Payments
Regulation: 24 CFR § 5.609(b)(4)
Summary: Payments received for the care of foster children or foster adults, or state or
Tribal kinship or guardianship care payments, are excluded from annual income.
This income exclusion also applies to Kinship Guardian Assistance Payments (Kin-
GAP), kinship care payments, and other state-based kinship or guardianship payments
that are alternatives to traditional foster care programs.
PHA/MFH Owner Discretion: None.
G.6 Insurance Payments or Settlements
Regulation: 24 CFR § 5.609(b)(5)
Summary: Insurance payments and settlements for personal or property losses, including
but not limited to payments under health insurance, motor vehicle insurance, and
workers’ compensation, are excluded from annual income. Any workers’ compensation is
always excluded from annual income, regardless of the frequency or length of the
payments.
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Example G5: Insurance Payments or Settlements
Bethanne Williams received a settlement from her insurance company in the amount of $2,500
because of a car accident. Bethanne’s car accident settlement payment is excluded from annual
income.
Example G6: Workers’ Compensation Received In Lieu of Wages
Tobias Reynolds was injured in a work accident. He is receiving bi-weekly workers’ compensation
payments. These amounts are excluded from annual income.
PHA/MFH Owner Discretion: None.
G.7 Civil Action Recoveries or Settlements
Regulation: 24 CFR § 5.609(b)(7)
Summary: Any amounts recovered in any civil action or settlement based on a claim of
malpractice, negligence, or other breach of duty owed to a family member arising out of
law that resulted in a member of the family becoming a person with disabilities are
excluded from annual income. Any amounts recovered are excluded irrespective of
whether they are received periodically or in a lump sum payment.
Example G7: Civil Action Recoveries or Settlements
Jacob Mitchell became a person with disabilities due to a construction site accident. He received
$60,000 from a civil negligence case. The $60,000 received by Jacob is excluded from annual income.
PHA/MFH Owner Discretion: None.
G.8 Earned Income of Dependent Full-Time students
Regulation: 24 CFR § 5.609(b)(14)
Summary: Earned income of dependent full-time students in excess of the amount of the
deduction for a dependent in § 5.611 is excluded from annual income. Full-time students
must be dependent family members for this exclusion to apply. This exclusion does not
apply to the head of household, spouse, or co-head. This means that the first $480 of the
income earned by dependent full-time students will be included in the family’s
calculation of annual income.
The dependent deduction will be adjusted annually in accordance with the (CPI–W). See
Attachment H. Full-time dependent students are eligible to receive both the $480 (as
adjusted for inflation) dependent deduction and the exclusion described in this paragraph.
PHA/MFH Owner Discretion: None.
G.9 Adoption Assistance Payments
Regulation: 24 CFR § 5.609(b)(15)
Summary: Adoption assistance payments in excess of $480 per adopted child are
excluded from the family’s calculation of annual income. This amount will be adjusted
annually in accordance with the CPI–W. See Attachment H.
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All dependents, including adopted family members, are eligible to receive the $480 (as
adjusted for inflation) dependent deduction and the exclusion described in this paragraph.
PHA/MFH Owner Discretion: None.
G.10 Veterans Regular Aid and Attendance
Regulation: 24 CFR § 5.609(b)(17)
Summary: Payments to veterans in need of regular aid and attendance are excluded from
annual income under 38 U.S.C. 1521. This income exclusion applies only to veterans in
need of regular aid and attendance and not to other beneficiaries of the payments, such as
a surviving spouse.
Certain veterans are eligible for “aid and attendance” payments from the Veterans Affairs
(VA) Administration. These payments are distinct from payments made to veterans under
other VA programs, including the Veterans Pension program. PHAs/MFH Owners should
carefully review any income documentation provided by the family, because many types
of VA income, including the Veterans Pension and the VA Survivors Pension, are
included in annual income.
PHA/MFH Owner Discretion: None.
G.11 Home-Based Care Payments for a Family Member(s) with a Disability(ies)
Regulation: 24 CFR § 5.609(b)(19)
Summary: Payments made by or authorized by a state Medicaid agency (including
through a managed-care entity) or other state or federal agency to a family to enable a
family member who has a disability to reside in the family’s assisted unit are excluded
from the calculation of the family’s annual income. Authorized payments may include
payments to a member of the assisted family through the state Medicaid agency
(including through a managed-care entity) or other state or federal agency for caregiving
services the family member provides to enable a family member who has a disability to
reside in the family’s assisted unit.
A family member with a disability qualifies for this income exclusion. Amounts received
may be intended for items such as services, equipment, and compensation provided to a
family member. The payments are excluded from income as long as the amounts are
provided to enable a family member with a disability to remain in the family’s assisted
unit. Both the person providing the care and the person who has the disability must be
family members (not household members) and must live in the same assisted household.
The exclusion does not apply to income earned by the family for other caregiving
services provided to individuals outside of the assisted household.
PHA/MFH Owner Discretion: None.
G.12 Loan Proceeds
Regulation: 24 CFR § 5.609(b)(20)
Summary: Loan proceeds (the net amount disbursed by a lender to a borrower under the
terms of a loan agreement) received by the family or a third party (e.g., proceeds received
by the family to finance the purchase of a car) are excluded from annual income. The
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loan borrower or co-borrower must be a member of the family for this income exclusion
to be applicable.
Loan proceeds may include, but are not limited to, personal loans (with a loan agreement)
and student loans, regardless of whether the proceeds are received in the form of a refund
to the student.
PHA/MFH Owner Discretion: None.
G.13 Certain Payments Received by Tribal Members
Regulation: 24 CFR § 5.609(b)(21)
Summary: Payments received by Tribal members as a result of claims relating to the
mismanagement of assets held in trust by the United States, to the extent such payments
are also excluded from gross income under the Internal Revenue Code (IRC) or other
federal law, are excluded from annual income.
Generally, payments received by tribal members in excess of the first $2,000 of per-
capita shares are included in a family’s annual income for purposes of determining
eligibility. However, as explained below, payments made under the Cobell Settlement,
and certain per-capita payments under the recent Tribal Trust Settlements, must be
excluded from annual income in HUD programs that adopt the definitions of annual
income in 24 CFR 5.609, the Census Long Form, and the IRS Form 1040, including the
programs affected by this notice.G1
The following two subsections describe the circumstances when settlement payments
paid to Tribal members are excluded from annual income through federal law or as
required under the IRC.
G.13.a Cobell Settlement
In Elouise Cobell et al. v. Ken Salazar et al.,G2 a class of individual members of
Indian tribes filed suit against the United States for its failure to adequately
manage certain trust assets. The settlement was authorized pursuant to the Claims
Resolution Act of 2010 (Pub. L. 111–291). In accordance with the Act, lump-sum
or periodic payments received by an individual Indian under the Cobell
Settlement are statutorily excluded from counting toward a family’s annual
income, or as a resource, for purposes of determining initial eligibility or level of
HUD assistance, for a period of one year from the time of receipt of that payment.
This exclusion from income applies to all HUD programs and is included in the
G1
A payment received by a tribal member from the tribe for distribution of Indian gaming profits is not a per-capita
payment within the meaning of the Per Capita Distribution Act and does not qualify for income exclusion. If a
family member who is a tribal member receives the Internal Revenue Service (IRS) Form 1099–MISC,
Miscellaneous Income, from the tribe for reporting Indian gaming profits, then this payment must be counted toward
the family’s annual income.
G2
https://naturalresources.house.gov/uploadedfiles/cobellsettlementagreement_120709.pdf.
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list of federally mandated exclusions from annual income that HUD periodically
publishes in the Federal Register.G3
G.13.b Tribal Trust Settlements
The United States has entered into settlements with a number of federally
recognized Indian tribes, settling litigation in which the tribes alleged that the
Department of the Interior and the Department of the Treasury mismanaged
monetary assets and natural resources the United States holds in trust for the
benefit of the tribes. In some circumstances, proceeds from these settlements have
resulted in, or will result in, per-capita payments to Indian families by Indian
tribes. To date, at least 70 Indian tribes have settled Tribal Trust cases.
24 CFR 5.609(b)(21) requires that certain payments received by Tribal members,
to the extent that such payments are excluded from gross income under the IRC,
must be excluded from family income. The Internal Revenue Service (IRS) issued
guidance in IRS Notice 2013–1, “Per Capita Payments from Proceeds of
Settlements of Indian Tribal Trust Cases,” advising that per-capita payments
made from the proceeds of the enumerated Tribal Trust Settlements are excluded
from the gross income of the members of the tribe receiving the per-capita
payments under 25 USC 117b(a) and 25 USC 1407.
IRS Notice 2013–1 also clarifies, however, that per-capita payments that exceed
the amount of the Tribal Trust Settlement proceeds and that are made from an
Indian tribe’s private bank account in which the tribe has deposited the settlement
proceeds are included in the gross income of the members of the tribe receiving
the per-capita payments. For example, if an Indian tribe receives proceeds under a
settlement agreement, invests the proceeds in a private bank account that earns
interest, and subsequently distributes the entire amount of the bank account as
per-capita payments, then a member of the tribe excludes from gross income that
portion of the member’s per-capita payment attributable to the settlement
proceeds under 25 USC 117b(a) and 25 USC 1407 and must include the
remaining portion of the per-capita payment in gross income in accordance with
the guidance provided in IRS Notice 2013-1. Per-capita payments not excluded
from gross income in accordance with the IRC should be reviewed for potential
exclusion as “nonrecurring income” (24 CFR § 5.609(b)(24)) or as “lump sum
additions to net family assets” (24 CFR § 5.609(b)(24)(vii)).
The IRS last updated the list of Indian tribes who have entered into Tribal Trust
Settlements with the United States in 2013,G4 and for whom per-capita Tribal
Trust payments are excluded from gross income. PHAs/MFH Owners should
ensure they are reviewing the current list of Tribal Trust Settlements when
determining whether a family’s per-capita proceeds should be excluded from
annual income.
G3
Last published on 5/20/2014: https://www.federalregister.gov/documents/2014/05/20/2014-11688/federally-
mandated-exclusions-from-income-updated-listing.
G4
See IRS Notice 2013-55, available at: http://www.irs.gov/pub/irs-drop/n-13-55.pdf.
83
Example G8: Tribal Trust Settlements
Scenario A: An Indian tribe received $1.2 million from a Tribal Trust Settlement. The Indian tribe
immediately distributed per-capita payments to its members. The Tribal Trust Settlement is treated in
accordance with the guidance in IRS Notice 2013–1 and excluded from adjusted gross income under
25 USC 117b(a) and 25 USC 1407. Therefore, the per-capita payments to members are excluded from
annual income.
Scenario B: An Indian tribe received $10 million from a Tribal Trust Settlement. The Indian tribe
invested the settlement funds at a private institution. After a year, the Indian tribe distributed the
settlement funds plus earned interest to its members. IRS Notice 2013–1 provides guidance that per
capita payments that exceed the amount of the Tribal Trust case settlement proceeds and that are
made from an Indian tribe’s private bank account in which the tribe has deposited the settlement
proceeds are not excluded from adjusted income under 25 USC 117b(a) and 25 USC 1407, so the
interest payments to members are not excludable from annual income under 24 CFR 5.609(b)(21). The
PHA/MFH Owner must determine whether the per-capita interest payments to members should be
included in the family’s income or excluded from income under a different regulatory provision such as
24 CFR 5.609(b)(24).
Please note that the first $2,000 of per capita payments are also excluded from assets, except when
these per capita payments are in excess of the settlement amount and are included (IRS Notice 2013-
1, 25 USC 117b(a), and 25 USC 1407).
PHA/MFH Owner Discretion: None.
G.14 Exclusions from Other Federal Statutes
Regulation: 24 CFR § 5.609(b)(22)
Summary: This exclusion applies to all amounts that HUD is required by federal statute
to exclude from annual income. HUD will publish a notice in the Federal Register to
identify the benefits that qualify for this exclusion. Updates will be published when
necessary.
PHA/MFH Owner Discretion: None.
G.15 Replacement Housing Gap Payments
Regulation: 24 CFR § 5.609(b)(23)
Summary: Replacement housing “gap” payments made in accordance with the Uniform
Relocation Assistance and Real Property Acquisition Policies Act of 1970 (“URA”), as
implemented by 49 CFR Part 24, are excluded from annual income. “Gap” payments
offset the increased out-pocket costs of displaced persons who move from one federally
subsidized housing unit to another federally subsidized housing unit.
However, replacement housing “gap” payments are not excluded from annual income if
the increased cost of rent and utilities is reduced or eliminated, and the displaced person
retains or continues to receive the replacement housing “gap” payments.
Replacement housing “gap” payments should cover a minimum of 42 months of tenancy
at the new unit.
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Example G9: Replacement Housing Gap Payments
The Patel family was displaced from their Project-Based Voucher unit as the result of a HUD-funded
acquisition and rehabilitation of the property that will last longer than one year. The family subsequently
obtained a Housing Choice Voucher (HCV) and moved into a home where the owner accepts HCVs.
The Patels’ rent and utility expenses are $100 higher in their new unit. The Patels receive replacement
housing “gap” payments of $100 intended to cover the difference between the Patels’ former rent and
utility expenses in their Project-Based Voucher unit and their current rent and expenses under their
HCV assistance. The “gap” payments must be excluded from the family’s annual income for the period
during which gap payments are provided under the URA (42 months) or the increased cost of rent and
utilities is reduced or eliminated, whichever is shorter.
PHA/MFH Owner Discretion: None.
G.16 Student Financial Assistance
Regulation: 24 CFR § 5.609(b)(9)
Summary: The treatment of student financial assistance depends on the HUD program,
student/household characteristics, and the type of financial assistance received by the
student. The student financial assistance rules apply to both full-time and part-time
students.
The two types of student financial assistance applicable to MFH and PIH programs are
described below.
G.16.a Amounts Received Under Section 479B of the Higher Education Act (HEA)
of 1965, as amended (20 U.S.C. 1087uu)
Section 479B provides that certain types of student financial assistance are to be
excluded in determining eligibility for benefits made available through federal,
state, or local programs financed with federal funds. The types of financial
assistance listed below are considered 479B student financial assistance
programs; however, this list is not exhaustive, and 479B will be updated as of July
1, 2024.
Federal Pell Grants;
Teach Grants;
Federal Work Study Programs;
Federal Perkins Loans;
Student financial assistance received under the Bureau of Indian Education;
Higher Education Tribal Grant;
Tribally Controlled Colleges or Universities Grant Program;
Employment training program under section 134 of the Workforce Innovation
and Opportunity Act (WIOA).
G.16.b Other Student Financial Assistance
Other student financial assistance includes grants or scholarships received from
the following sources:
85
The Federal government;
A state (including U.S. territories), Tribe, or local government;
A private foundation registered as a nonprofit under 26 U.S.C. 501(c)(3);
A business entity (such as a corporation, general partnership, limited liability
company, limited partnership, joint venture, business trust, public benefit
corporation, or nonprofit entity); or
An institution of higher education.
Other student financial assistance does not include:
Financial support provided to the student in the form of a fee for services
performed (e.g., a work study or teaching fellowship that is not excluded
under section 479B of the Higher Education Act HEA); or
Gifts, including gifts from family or friends.
Note: Other student financial assistance may be paid directly to the student or to
the educational institution on the student’s behalf. The PHA/MFH Owner must
verify that the other student financial assistance is for the student’s actual covered
costs.
The following sections describe the treatment of the two above-described types of
student financial assistance by program type.
G.16.c Non–Section 8 Programs Subject to this Notice
All assistance received under 479B of the HEA by students participating in the
Public Housing or non–Section 8 programs administered by MFH is excluded
from income. Other student financial assistance received by the student that,
either by itself or in combination with HEA assistance, exceeds the actual covered
costs is not excluded from income. Prior to the final rule, the full amount of
student financial assistance paid directly to the student or to the educational
institution was excluded.
Actual covered costs include: tuition, books, supplies (including supplies and
equipment to support students with learning disabilities or other disabilities),
room and board, and fees required and charged to a student by an institution of
higher education (as defined under section 102 of the Higher Education Act of
1965 (20 U.S.C. 1087uu)). For a student who is not the head of household, co-
head, or spouse, actual covered costs also include the reasonable and actual costs
of housing while attending the institution of higher education and not residing in
an assisted unit.
The formula for calculating the amount of other student financial assistance that is
excluded from income always begins with deducting the assistance received under
479B of the HEA from the total actual covered costs, because the 479B assistance
is intended to pay the student’s actual covered costs. This formula is illustrated in
chart 2, below.
86
Chart G1: Steps in Calculating Amount of Other Student Financial Assistance
Step 1: Subtract the amount received under section 479B of the HEA from the actual covered
costs to arrive at the amount of actual covered costs exceeding section 479B assistance.
If the amount of assistance received under section 479B of the HEA exceeds the actual covered costs
and the student did not receive any other student financial assistance, then step 2 is not necessary;
none of the student financial assistance will be included in income, because the assistance received
under section 479B of the HEA is excluded from income for students participating in the Public Housing
and non–Section 8 programs administered by MFH.
Step 2: Subtract the actual covered costs exceeding section 479B assistance from the amount of
other student financial assistance to arrive at the amount of student financial assistance included
in income.
Step 2 requires the amount of other student financial assistance received by the student to be
subtracted from the amount of actual covered costs paid by other means. If the resulting number in
Step 2 is a positive amount, then that is the amount that should be included in the family’s income. If
the resulting number in Step 2 is zero or a negative amount, then there will be no student financial
assistance included in income (i.e., all student financial assistance is excluded from annual income).
The following examples illustrate the treatment of student financial assistance for
Public Housing and non–Section 8 programs:
Example G10: Treatment of Student Financial Assistance in
Non–Section 8 Programs
Juan is a full-time student, and he received the following grants and scholarships to cover his first year
of college: Federal Pell Grant: $25,000; University Scholarship: $15,000; Rotary Club Scholarship:
$3,000.
Total assistance received under 479B of HEA: Juan’s actual covered costs: $28,000
$25,000 (Federal Pell Grant)
Total other student financial assistance received:
$18,000
Step 1: Determine amount of actual covered costs Step 2: Determine amount of student financial
exceeding section 479B assistance. assistance to include in income.
$28,000 (actual covered costs) minus $25,000 $18,000 (other student financial assistance
(total assistance received under 479B of HEA) received) minus $3,000 (actual covered costs
equals $3,000 exceeding section 479B assistance) equals
$15,000 (if negative, then use $0)
Amount of student financial assistance included in Juan’s income: $15,000
87
Example G11: Treatment of Student Financial Assistance in
Non–Section 8 Programs
Sarah is a part-time student, and she received the following amounts to cover her first year of college:
Federal Perkins Loan: $2,000; Scholarship from Local Car Dealership: $500; Gift from Aunt Lois:
$1,000.
The $1,000 is a gift from Aunt Lois, so it is not considered student financial assistance, and it is not
considered in this calculation. Note: If Aunt Lois gives Sarah the $1,000 gift as a one-time, lump-sum
payment, it would be excluded from income under 24 CFR § 5.609(b)(24)(vii).
Total assistance received under 479B of HEA: Sarah’s actual covered costs: $3,000
$2,000 (Federal Perkins Loan)
Total other student financial assistance received:
$500
Total non-student financial assistance: $1,000
Total student financial assistance: $2,500
Step 1: Determine amount of actual covered costs Step 2: Determine amount of student financial
exceeding section 479B assistance. assistance to include in income.
$3,000 (actual covered costs) minus $2,000 (total $500 (other student financial assistance received)
assistance received under 479B of HEA) equals minus $1,000 (amount of actual covered costs
$1,000 exceeding section 479B assistance) equals –
$500 (if negative, then use $0)
The amount of student financial assistance received by Sarah is less than her actual covered costs
after deducting assistance received under 479B of the HEA and other student financial assistance
received, therefore there is no student financial assistance to include in income.
Amount of student financial assistance included in Sarah’s income: $0
Example G12: Treatment of Student Financial Assistance
in Non–Section 8 Programs
Dante is a full-time student, and he received the following amounts to cover his first year of college:
Federal Pell Grant: $9,000; Federal Perkins Loan: $13,000; Local Library Scholarship: $1,000.
Total assistance received under 479B of HEA: Dante’s actual covered costs: $16,000
$22,000 (Federal Pell Grant plus Federal Perkins
Loan)
Total other student financial assistance received:
$1,000
Step 1: Determine amount of actual covered costs Step 2: Determine amount of student financial
exceeding section 479B assistance. assistance to include in income.
$16,000 (actual covered costs) minus $22,000 Not necessary because Step 1 resulted in a
(total assistance received under 479B of HEA) negative amount, so all other student financial
equals $–6,000 assistance would be included in Dante’s income
Amount of student financial assistance included in Dante’s income: $1,000
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G.16.d Section 8 (Including HCV and 202/8)
There are distinct differences in the treatment of student financial assistance
between the Section 8 program and the Public Housing and non–Section 8
programs administered by MFH due to language in the annual appropriations acts.
Section 210(b) of the Consolidated Appropriations Act, 2023,G5 requires that, “for
purposes of determining the eligibility of a person to receive assistance under
section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f), any
financial assistance (in excess of amounts received for tuition and any other
required fees and charges) that an individual receives under the Higher Education
Act of 1965 (20 U.S.C. 1001 et seq.), from private sources, or from an institution
of higher education (as defined under section 102 of the Higher Education Act of
1965 (20 U.S.C. 1002)), shall be considered income to that individual, except for
a person over the age of 23 with dependent children.” HUD interprets that “a
person over the age of 23” is 24 years old.
While the Consolidated Appropriations Act, 2023, language is limited to federal
fiscal year 2023, this does not rule out the possibility that similar language will be
included in future years’ appropriations bills. For any funds from a year where
HUD’s appropriations include this Section 8 student financial assistance
limitation, if the student is the head of household, co-head, or spouse and is under
the age of 23 or without dependent children, then both the assistance received
under 479B of the HEA and other student financial assistance received by the
student will be counted as income to the extent that it exceeds the total of tuition
and any other required fees and charges.G6 In contrast, the student financial
assistance received by a Section 8 student who is the head of household, spouse,
or co-head of household and is over the age of 23 with dependent children will be
treated in a manner identical to the student financial aid received by students who
participate in the Public Housing and non–Section 8 programs administered by
MFH.
During years in which an appropriations act does not contain this Section 8
student financial assistance limitation (or any other such limitation), then the
determination of student financial assistance as included/excluded income for all
Section 8 students defaults to the methodology described above for the Public
Housing and non–Section 8 programs administered by MFH.
There are two steps required as part of the calculation for Section 8 students, the
first of which is to determine the student’s relationship to the household, age, and
whether they have dependent children; based on the result of the first step, the
second step is to calculate whether any excess student financial assistance should
be included in the family’s income. If the student is the head of household, co-
G5
https://www.congress.gov/117/bills/hr2617/BILLS-117hr2617enr.pdf.
G6
The definition of tuition and other required fees and charges for Section 8 students is synonymous with the
definition of “actual covered costs” described in the previous section for the Public Housing and non–Section 8
programs administered by MFH. For Section 8 students, HUD uses the term “tuition and other required fees” solely
to reflect the language in the appropriations bill.
89
head, or spouse and is 23 or younger or does not have dependent children, then
479B assistance will be part of the total equation (see example G13, below). If the
student is over 23 with dependent children, then the calculation will be identical
for Public Housing and non–Section 8 MFH students, as described above.
The formula for calculating the excess amounts of financial assistance included in
annual income is a one-step process of subtracting the total tuition plus required
fees and charges from the total student financial assistance from all sources The
one-step calculation is illustrated in chart 3, below.
Chart G2: Formula for Calculating Excess Amounts of Financial Assistance
Subtract total tuition plus required fees and charges from the total student financial assistance
from all sources to arrive at excess amount of student financial assistance.
If the excess amount of student financial assistance is a positive number, then include that amount in
annual income. If the excess amount of student financial assistance is zero or negative, then do not
include that amount in annual income.
If the total tuition plus required fees and charges is zero or exceeds the amount of total financial
assistance from all sources, then no excess amounts of student financial assistance will be included in
annual income. Any amount of student financial assistance that exceeds the total tuition plus required
fees and charges must be included in annual income.
Example G13: Treatment of Student Financial Assistance
in Section 8 Programs
Roberto is a 22-year-old full-time student without dependent children. Since Roberto is a Section 8
participant head of household who is not over 23 with dependent children, the PHA/MFH Owner
follows the Appropriations Act policy to determine if Roberto receives student financial assistance in
excess of tuition from both HEA and other sources. Roberto received the following amounts to cover
his first year of college: Federal Pell Grant: $12,000; University Scholarship: $22,000; City Scholarship:
$3,000.
Total assistance received under 479B of HEA: Total tuition + required fees and charges: $27,000
$12,000 (Federal Pell Grant)
Total other student financial assistance received:
$25,000
Total student financial assistance from all
sources: $37,000
Subtract the total cost of tuition + required fees and charges from the total amount of student financial
assistance: $37,000 – $27,000 = $10,000
The total amount of student financial assistance from all sources received by Roberto exceeds the total
amount of tuition and required fees and charges.
Excess student financial assistance: $10,000
Amount of student financial assistance included in Roberto’s income: $10,000
Example G14: Treatment of Student Financial Assistance
in Section 8 Programs
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Cedric is a 28-year-old head of household and a full-time student with a 5-year-old daughter and a 9-
year-old son who are his dependents. The PHA/MFH Owner will follow the rules under § 5.609(b)(9)
(the same as for non–Section 8 programs) as described in the previous section. Cedric received the
following amounts to cover his first year of college: Teach Grant: $8,000; Federal Pell Grant: $3,000;
College Scholarship: $6,000.
Total assistance received under 479B of HEA: Total tuition + required fees and charges: $26,000
$11,000 (Teach Grant plus Federal Pell Grant)
Total other student financial assistance received:
$6,000
Step 1: Determine amount of tuition plus required Step 2: Determine amount of student financial
fees exceeding 479B assistance. assistance to include in income.
$26,000 (total tuition + required fees and charges) $6,000 (other student financial assistance
minus $11,000 (total assistance received under received) minus $15,000 (amount of tuition +
479B of HEA) equals $15,000 required fees and charges exceeding 479B
assistance) equals –$9,000 (if negative, then use
$0)
The amount of other student financial assistance received by Cedric does not exceed the total amount
of tuition and required fees and charges.
Excess student financial assistance: $0
Amount of student financial assistance included in Cedric’s income: $0
Example G15: Treatment of Student Financial Assistance
in Section 8 Programs
Angel is a 38-year-old full time student, head of household, without dependent children. Since Angel
does not have dependent children, the Appropriations Act policy does not apply, and the PHA/MFH
Owner must include assistance received under 479B of the HEA as part of the excess student financial
aid calculation. Angel received the following amounts to cover her first year of college: Federal Work
Study program: $8,000.
Total assistance received under 479B of HEA: Total tuition + other fees and charges: $6,200
$8,000 (Federal Work Study Program)
Determine whether the amount of student financial assistance, including 479B assistance, exceeds the
total of tuition + required fees and charges: $8,000 – $6,200 = $1,800
Excess student financial assistance: $1,800
Amount of student financial assistance included in Angel’s income: $1,800
PHA/MFH Owner Discretion: None.
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G.17 Achieving a Better Life Experience (ABLE) Accounts
Regulation: 24 CFR § 5.609(b)(22)
Summary: ABLE accounts are excluded from the definition of net family assets, and
therefore income generated from such accounts is not considered when calculating
income from assets. Distributions from these accounts are also excluded from income.
HUD developed specific guidance on ABLE accounts based on language included in the
ABLE Act of 2014. Certain contributions deposited into ABLE accounts are excluded in
addition to the above-mentioned exclusions. See Treatment of ABLE Accounts in HUD-
Assisted Programs (Notice H 2019–06/PIH 2019–09).
PHA/MFH Owner Discretion: None.
G.18 Income and Distributions from Coverdell Education Savings Accounts, 529
Accounts and “Baby Bond” Accounts
Regulation: 24 CFR § 5.609(b)(10)
Summary: Income and distributions from any Coverdell education savings account
under section 530 of the Internal Revenue Code of 1986 or any qualified tuition program
under section 529 of such Code; and income earned by government contributions to, and
distributions from, “baby bond” accounts created, authorized, or funded by Federal, State,
or local government are excluded from income and net family assets.
PHA/MFH Owner Discretion: None.
G.19 Gross Income from Self-Employment or Operation of a Business
Regulation: 24 CFR §§ 5.609(b)(24) and 5.609(b)(28)
Summary: The gross income received by a family through self-employment or the
operation of a business is excluded from income. Gross income is all income amounts
received into the business, prior to the deduction of business expenses. To determine the
amount of business or self-employment income included in a family’s annual income, the
net income of the business must first be determined.
Net income is the “gross income amount minus business expenses” that allows the
business to operate.
The net income from self-employment or the operation of a business is considered
income. Expenditures for business expansion or amortization of capital indebtedness are
not deductible when determining the income from a business. An allowance for the
depreciation of assets used in a business or profession may be deducted, based on a
straight-line depreciation, as provided in IRS’s regulations.G7 Any withdrawal of cash or
assets from the operation of a business is income except to the extent that such
withdrawal is to reimburse the family member for cash or assets that the family has
invested in the operation of the business.
G7
26 CFR § 1.167(b)-1 Straight line method: https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-
1/subject-group-ECFRc4930337f38ecfd/section-1.167(b)-1.
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Example G16: Exclusion of Gross Income
from Self-Employment or Operation of a Business
Bill Conrad is the sole owner of BC Lawn Service. BC Lawn Service grossed $75,000 annually in 2024.
BC Lawn Service also incurred a total of $35,000 in business expenses, including lawn equipment,
rakes, insurance, depreciation of a tractor, and wage payments. After subtracting the $35,000 in
business expenses from the $75,000 gross income, the net income is $40,000, which will be included
in Bill’s calculation of annual income.
PHA/MFH Owner Discretion: None.
G.20 Elimination of the Earned Income Disregard (EID)
Regulation: 24 CFR § 5.611
Summary: The Earned Income Disregard (EID) will not apply to any family who is not
eligible for and already participating in the disallowance as of December 31, 2023.
The EID allowed eligible families to have a portion of their earned income excluded from
annual income for a maximum period of 24 consecutive months.
Although HOTMA eliminates the EID from HUD regulations, families who were
receiving the EID benefit as of December 31, 2023, may continue to receive the full
benefit until the remaining timeframe for an individual family’s EID expires. Because the
EID lasts up to 24 consecutive months, no family will still be receiving the EID benefit
after December 31, 2025.
Note: The EID policies described above are distinct from similar policies in the Jobs Plus
program. Families eligible to receive the Jobs Plus program rent incentive (Jobs Plus
Earned Income Disregard (JPEID)) pursuant to the FY2023 Notice of Funding
Opportunity (NOFO) or earlier appropriation distributed through prior Jobs Plus NOFOs
may continue to receive JPEID under the terms of the NOFO. The JPEID was established
by HUD as an alternative requirement to EID for Jobs Plus grantees by waiving section
3(d) of the U.S. Housing Act of 1937 (42 U.S.C. 1437a(d)) and § 960.255(b) and (d). For
more information about JPEID waivers and alternative requirements, please review the
following Federal Register notices: 80 FR 13415 (March 13, 2015) and 83 FR 13506
(March 29, 2018).
PHA/MFH Owner Discretion: None.
G.21 Civil Rights Settlements or Judgments
Regulation: 24 CFR § 5.609(b)(25)
Summary: Civil rights settlements or judgments, including settlements or judgments for
back pay, are excluded from the calculation of annual income.
Historically HUD has followed a practice of excluding from income civil rights
settlements and judgments as lump-sum additions to assets, which would include
amounts received as a result of litigation or other actions, such as conciliation
agreements, voluntary compliance agreements, consent orders, other forms of settlement
agreements, or administrative or judicial orders under nondiscrimination laws. However,
this new exclusion clarifies that even where such payments are not lump-sum payments
but instead may have a payment schedule, such payments are excluded. Additionally, this
93
exclusion applies to back pay received by the family pursuant to a civil rights settlement
or judgment.
PHA/MFH Owner Discretion: None.
94
ATTACHMENT H: TOPIC: INFLATIONARY ADJUSTMENTS
Regulations
See table H1, below.
Applicable Programs
HUD Multifamily Housing HUD Multifamily Housing Public and Indian Housing
Section 8 (Project Based Rental Section 202/162 PAC, Section HCV (including Project-Based
Assistance) 202/8, Section 202/811 PRAC, vouchers), Public Housing, Section
Section 236 IRP, Section 811 PRA, 8 Moderate Rehabilitation, Section
SPRAC 8 Moderate Rehabilitation SRO
Yes Yes Yes
Summary
HUD will annually publish the eight inflation-adjusted items in the table below no later than
September 1, and the updated values will be shared online at the HUD User website. The
publication will apply to both MFH and PIH programs. The revised amounts will be effective on
January 1 of the following year. The first set of adjustments for inflation will be made effective
January 1, 2025.
HUD plans to publish in the Federal Register a notice soliciting the public’s comment on HUD’s
methodology for recalculating inflationary adjusted items.
Table H1: Inflationary Adjustment Items
Amount
Effective on
Regulatory Notice 1/1/2024 Rounding Applicable
Adjusted Item
Reference Section (subject to Methodology Programs
Annual
Adjustment)
Section 8
PBRA, 202/8,
Eligibility HCV, Public
restriction on 24 CFR Housing,
Attachment A $100,000 Nearest dollar
net family § 5.618(a)(1)(i) Section 8 Mod
assets Rehab,
Section 8 Mod
Rehab SRO
Threshold Section 8
above which PBRA, 202/8,
imputed 24 CFR 202/811
returns must §§ 5.609(a)(2) Attachment F $50,000 Nearest dollar PRAC, 236
be calculated and (b)(1) IRP, 811 PRA,
on net family SPRAC, HCV,
assets Public
Housing,
95
Section 8 Mod
Rehab,
Section 8 Mod
Rehab SRO
Section 8
PBRA, 202/8,
Threshold
202/811
above which
PRAC, 236
the total value
IRP, 811 PRA,
of non- 24 CFR
SPRAC, HCV,
necessary § 5.603(b) Net Attachment F $50,000 Nearest dollar
Public
personal family assets
Housing,
property is
Section 8 Mod
included in net
Rehab,
family assets
Section 8 Mod
Rehab SRO
24 CFR Section 8
§ 5.618(b)(1) PBRA, 202/8,
202/811
24 CFR
PRAC, 236
§ 5.659(e)
IRP, 811 PRA,
24 CFR SPRAC, HCV,
The amount of § 92.203(e)(1) Public
net assets for Housing,
which the 24 CFR
Section 8 Mod
PHA/MFH § 93.151(e)(1)
Attachment F $50,000 Nearest dollar Rehab,
Owner may 24 CFR Section 8 Mod
accept self- § 882.515(a) Rehab SRO
certification by
the family 24 CFR
§ 882.808(i)(1)
24 CFR
§ 960.259(c)(2)
24 CFR
§ 982.516(a)(3)
Section 8
PBRA, 202/8,
202/811
PRAC, 236
Mandatory
IRP, 811 PRA,
deduction for
24 CFR Next lowest SPRAC, HCV,
elderly and Attachment C $525
§ 5.611(a)(2) multiple of $25 Public
disabled
Housing,
families
Section 8 Mod
Rehab,
Section 8 Mod
Rehab SRO
Mandatory Section 8
24 CFR Next lowest PBRA, 202/8,
deduction for a Attachment C $480
§ 5.611(a)(1) multiple of $25 202/811
dependent
PRAC, 236
96
IRP, 811 PRA,
SPRAC, HCV,
Public
Housing,
Section 8 Mod
Rehab,
Section 8 Mod
Rehab SRO
Section 8
PBRA, 202/8,
202/811
Income PRAC, 236
exclusion for IRP, 811 PRA,
earned income 24 CFR Next lowest SPRAC, HCV,
Attachment G $480
of dependent § 5.609(b)(14) multiple of $25 Public
full-time Housing,
students Section 8 Mod
Rehab,
Section 8 Mod
Rehab SRO
Section 8
PBRA, 202/8,
202/811
PRAC, 236
Income
IRP, 811 PRA,
exclusion for
24 CFR Next lowest SPRAC, HCV,
adoption Attachment G $480
§ 5.609(b)(15) multiple of $25 Public
assistance
Housing,
payments
Section 8 Mod
Rehab,
Section 8 Mod
Rehab SRO
HUD will annually publish the recalculated inflationary-adjusted items to HUD’s Policy
Development and Research Web site, HUD User. The new amounts will become effective
January 1 of the following year.
PHAs/MFH Owners must use the adjusted levels post to HUD User for income and asset
calculations effective on or after January 1 of the following year. Note that it will be particularly
important for PHAs/MFH Owners who begin reexaminations 90 to 120 days in advance of the
effective date of the reexamination to update their documents in a timely manner, because
several of these figures must be known from the outset of the reexamination. For example, when
a PHA/MFH Owner issues a reexamination notice and requests documents from a family, they
must be able to provide a form for the self-certification of assets that includes the updated
threshold value of net family assets above which the family may not self-certify.
97
ATTACHMENT I: TOPIC: INTERIM REEXAMINATIONS
Regulations
24 CFR §§ 5.657(c); 882.515(b); 960.257(b); 982.516(c); 891.105; 891.410(g)(2);
891.610(g)(2); and 891.750(c)(2)
Applicable Programs
HUD Multifamily Housing HUD Multifamily Housing Public and Indian Housing
Section 8 (Project Based Rental Section 202/162 PAC, Section HCV (including Project-Based
Assistance) 202/8, Section 202/811 PRAC, vouchers), Public Housing, Section
Section 236 IRP, Section 811 8 Moderate Rehabilitation, Section
PRAI1, SPRAC 8 Moderate Rehabilitation SRO
Yes Yes Yes
Summary
The following section focuses on HOTMA’s revisions to interim reexamination requirements.
The final rule changes the conditions under which interim reexaminations must be conducted,
codifies when interim reexaminations should be processed and made effective, and requires
PHAs/MFH Owners to implement the updated definition of income for streamlined income
determinations (subtopic I.9).
When the PHA/MFH Owner determines that an interim reexamination is required, they must ask
the family to report changes in all aspects of adjusted income and household composition. For
example, if the family is reporting a decrease in annual adjusted income that is more than 10
percent, but the family also had a change in assets, the change in assets must also be reviewed.
Through this notice, HUD explains that it is using its discretion, as authorized by HOTMA,
to require PHAs/MFH Owners to conduct interim reexaminations when a household adds
or removes household members, including family members, foster adults, foster children,
and live-in aides, whether the change results in a decrease, increase, or no change in the
family’s annual adjusted income (subtopic I.3).
HUD recommends as a best practice that PHAs/MFH Owners maintain documentation of all
reported changes in the family’s file, including those that did not result in an interim
reexamination. HUD also recommends reviewing the applicable regulations to ensure that any
program-specific reexamination requirements are followed.I2
Subtopics
I1
HUD is applying 24 CFR § 5.657 to 811 PRA families pursuant to Section 2.4(a)(1) of the Rental Assistance
Contract (RAC) Part II.
I2
For example, see 24 CFR § 891.410(g) and § 891.610(g)(3).
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I.1 Decreases in Annual Adjusted Income
Regulations: 24 CFR §§ 5.657(c)(2); 882.515(b)(2); 891.105; 891.410(g)(2);
891.610(g)(2); 960.257(b)(2); and 982.516(c)(2)
Summary: A family may request an interim reexamination for any change since their
last reexamination. However, the PHA/MFH Owner may decline to conduct an interim
reexamination if the PHA/MFH Owner estimates that the family’s annual adjusted
income will decrease by an amount that is less than 10 percent of the family’s annual
adjusted income, with the exception of circumstances in which household members are
added or removed, as described in subtopic I.3. Generally, PHAs/MFH Owners have the
discretion to set a lower percentage threshold, unless specified by HUD via notice, in
which case the lower percentage threshold must be included in the PHA/MFH Owner’s
ACOP, Administrative Plan, or Tenant Selection Plan, as applicable.
Upon the request of the family, PHAs/MFH Owners must conduct an interim
reexamination when a family’s annual adjusted income has changed by an amount that
the PHA/MFH Owner estimates will result in a decrease of 10 percent or more in annual
adjusted income or a lower threshold set by HUD or by a PHA/MFH Owner in their
ACOP, Administrative Plan, or Tenant Selection Plan, as applicable. When an income
decrease of any size is reported by a family, it is a recommended best practice for the
PHA/MFH Owner to note the reported decrease in the tenant file.
Note: In addition to decreases in family income, increases in a family’s deductions may
produce a sufficient decrease in annual adjusted income to require an interim
reexamination.
Example I1: Interim Reexaminations / Decreases in Annual Adjusted Income
Scenario A: A family experiences an increase in deductible child-care expenses from $0 to $12,000
annually. Before the change, their annual adjusted income was $40,000. Since the child-care expense
deduction results in a greater than 10-percent reduction in annual adjusted income, an interim
reexamination is required.
Scenario B: A family with an annual adjusted income of $9,600 experiences a loss of income of $500,
a 5.2% decrease. The decrease does not meet the 10-percent annual adjusted income threshold.
However, the PHA/MFH Owner has adopted a 5-percent annual adjusted income decrease policy;
therefore, the $500 decrease meets the threshold to trigger an interim reexamination.
PHA/MFH Owner Discretion: PHAs/MFH Owners may establish a percentage
threshold lower than 10 percent of annual adjusted income for processing interim
reexaminations due to decreases in a family’s annual adjusted income. PHAs/MFH
Owners must identify in their ACOPs, Administrative Plans, and Tenant Selection Plans,
as applicable, the percentage threshold they will use for conducting interim
reexamination decreases of a family’s annual adjusted income.
99
PHAs/MFH Owners are not permitted to establish a dollar-figure threshold amount
instead of a percentage threshold. PHAs/MFH Owners may establish policies to round
calculated percentage decreases up or down to the nearest unit (e.g., a calculated decrease
of 9.5 percent may be rounded up to 10 percent).
I.2 Increases in Annual Adjusted Income
Regulations: 24 CFR §§ 5.657(c)(3); 882.515(b)(3); 960.257(b)(3); and 982.516(c)(3);
891.105; 891.410(g)(2); and 891.610(g)(2)
Summary: PHAs/MFH Owners must conduct an interim reexamination when the
PHA/MFH Owner becomes aware that the family’s adjusted income has changed by an
amount that the PHA/MFH Owner estimates will result in an increase of 10 percent or
more in annual adjusted income or another amount established by HUD through a notice,
with the following exceptions:
PHAs/MFH Owners may not consider any increases in earned income when
estimating or calculating whether the family’s annual adjusted income has increased,
unless the family has previously received an interim reduction during the same
reexamination cycle; and
PHAs/MFH Owners may choose not to conduct an interim reexamination during the
last three months of a certification period if a family reports an increase in income
within three months of their next annual reexamination effective date.
Note: Families who delay reporting income increases until the last three months of their
certification period may be subject to retroactive rent increases in accordance with the
PHA/MFH Owner’s policies.
PHAs/MFH Owners must not process interim reexaminations for income increases that
result in less than a 10-percent increase in annual adjusted income, with the exception of
circumstances in which household members are added or removed, as described in
subtopic I.3. A series of smaller reported increases in adjusted income may cumulatively
meet or exceed the 10-percent increase threshold, at which point the PHA/MFH Owner
must conduct an interim reexamination. When an income increase of any size is reported
by a family, it is a recommended best practice for the PHA/MFH Owner to note the
reported increase in the tenant file.
If a family previously received an interim reexamination that resulted in a decrease to
their annual adjusted income during the same annual cycle, a PHA/MFH Owner has the
discretion to choose whether or not to conduct an interim for subsequent increases in
earned income of 10 percent or more during the same annual cycle. PHAs/MFH Owners
must identify in their ACOPs, Administrative Plans, and Tenant Selection Plans, as
applicable, if they perform interim reexaminations for earned income increases
subsequent to an interim decrease.
If a PHA/MFH Owner has a policy of considering increases in earned income after an
interim is conducted for a decrease in income, and the family’s annual adjusted income
100
has increased by 10 percent or more, the PHA/MFH Owner must conduct an interim
reexamination in accordance with their local policies. Conversely, PHAs/MFH Owners
that adopt local policies to never consider increases in earned income must not perform
an interim reexamination under these circumstances.
Example I2: Interim Reexaminations / Increases in Annual Adjusted Income
Scenario A: The Martinez family’s annual reexamination is due on 11/1/2024. The family no longer
has child-care expenses for their three children, resulting in an estimated 15-percent increase in the
family’s annual adjusted income. The family stopped paying for daycare as of 8/31/2024 and reported
the change (and certified no other changes to annual household income or expenses) to the PHA/MFH
Owner on 9/7/2024. Although 15 percent is well above the 10-percent threshold, the PHA/MFH Owner
does not process an interim reexamination, because they have a policy to not process interim
increases reported within three months of the next annual reexamination.
Scenario B: The Allen family had an annual adjusted income of $29,000 as of their last annual
reexamination effective 5/1/2024. The family experienced the following changes since 5/1/2024:
In July, the Allen family’s eldest child, Kristina Allen (age 20), starts going to college full-time on a
Pell Grant. Kristina is not employed, nor does she receive any other type of student financial
assistance. The family now qualifies for a $480 dependent deduction, because full-time students
are considered dependents.
The family reports Kristina’s student status to the PHA/MFH Owner, which noted the change in the
family’s file. Based on this change alone, the PHA/MFH Owner must not perform an interim
reexamination, because the dependent deduction amounts to a 1.7-percent decrease in the
family’s annual adjusted income.
In October of that year, Tom Allen, the head of household, begins receiving a pension of $575
monthly, or $6,900 annually. Tom reported the income change timely to his PHA/MFH Owner.
After reviewing the change reported by Tom, the PHA/MFH Owner determined that the Allen family’s
new annual adjusted income is $35,420, accounting for both the addition of Tom’s pension income and
the deduction of the dependent allowance for Kristina. The Allen family’s annual adjusted income
increased a total of $6,420, or 22 percent, which requires the PHA/MFH Owner to process an interim
reexamination to include Tom’s unearned income and the dependent deduction for Kristina.
Scenario C: The Nguyen family’s last annual reexamination was effective 4/1/2024. In June 2024,
Patrick Nguyen lost his job, and the family’s adjusted income fell from $25,000 to $13,000. The
PHA/MFH Owner conducted an interim reexamination for the decrease in income. In November 2024,
Kelly Nguyen finds a job, and the family’s adjusted income rises to $18,000. The PHA/MFH Owner has
a policy of considering increases in earned income after an interim reexamination has been performed
for a decrease in income in the same annual cycle. Since the Nguyen family’s annual adjusted income
has increased by more than 10 percent including Kelly’s earned income, and the family previously
received an interim reduction during the same reexamination cycle, the PHA/MFH Owner will conduct
an interim reexamination to include Kelly’s earned income.
Scenario D: The Mosberg family had an annual adjusted income of $35,909 based on earned income
and two dependent deductions as of their last annual reexamination effective 6/1/2024. The family
experienced the following changes since 6/1/2024:
In August, Libby reported she received a raise at work, increasing her annual earned income by
$2,650. She also recently started receiving monthly child support payments of $150, or $1,800
annually. She reported no other changes to the PHA/MFH Owner. While the combined increase of
earned income (wages) and unearned income (child support) is a 12.4-percent increase in annual
adjusted income since the 6/1/2024 annual reexamination, the PHA/MFH Owner must look at the
earned and unearned income changes independently to determine if an interim reexamination
should be performed. The earned income increase by itself is a 7.4 percent increase in annual
101
adjusted income, and the unearned income increase by itself is approximately a 5 percent
increase.
The PHA/MFH Owner documented in the tenant file that the family reported the changes, but an
interim reexamination was not performed because the 5-percent increase in annual adjusted income
based on unearned income does not meet the 10-percent threshold. Further, the PHA/MFH Owner
may not perform an interim reexamination for Libby’s 7.4-percent increase in annual adjusted income
based on earned income, because an interim reexamination for an income decrease during the
reexamination cycle was not completed and the family’s unearned income increase does not meet the
10-percent threshold to perform an interim. Note: Even if Libby’s change in earned income had
exceeded 10 percent of her annual income, the PHA/MFH Owner may not perform an interim
reexamination, because there was no prior interim reexamination for a decrease in income.
In November, Libby reported that her monthly child support payments increased again, from $150 to
$325. She certified no other changes to income or deductions. Libby’s annual unearned income from
child support of $3,900 is now a 10.9-percent increase in annual adjusted income (based on the
effective 6/1/2024 annual reexamination), so the PHA/MFH Owner must perform an interim
reexamination, but only for the unearned child support income. The PHA/MFH Owner will continue to
disregard the increased earned income reported by the family until the Mosberg’s next annual
reexamination.
PHA/MFH Owner Discretion: PHAs/MFH Owners have discretion on the following
policies:
Whether the PHA/MFH Owner will conduct interim reexaminations for
qualifying income increases reported by families within the last three months of a
family’s reexamination period; and
Whether the PHA/MFH Owner will include increases in earned income when
estimating or calculating increases in family’s annual adjusted income has
increased, when the family previously received an interim reduction during the
same reexamination cycle.
PHAs/MFH Owners must establish policies for the above-discretionary items in their
ACOPs, Administrative Plans, and Tenant Selection Plans, as applicable.
I.3 Changes in Household Composition
Regulations: 24 CFR §§ 5.657(c)(2)-(3); 882.515(b)(2)-(3); 960.257(b)(2)-(3); and
982.516(c)(2)-(3)
HUD is using its discretion, as authorized by HOTMA,8 to establish a lower
threshold through notice to process interim reexaminations under certain
circumstances.
Specifically, HUD requires PHAs/MFH Owners to apply a 0-percent threshold and
conduct interim reexaminations when a household adds or removes household members,
including family members, foster adults, foster children, and live-in aides, regardless if
8
42 USC 1437a(a)(6).
102
the change in household composition results in a decrease, increase, or no change in the
family’s annual adjusted income.
The exception to this policy is if adding or removing household members would require
an interim reexamination for an increase in annual adjusted income during the last three
months of a family’s recertification period, and the PHA/MFH Owner has a written
policy to not conduct interim reexaminations under these circumstances, then the
PHA/MFH Owner is not required to conduct an interim reexamination. The PHA/MFH
Owner must include the change in household composition in the family’s next annual
reexamination.
When conducting an interim reexamination for an increase due to the addition or removal
of a household member, the PHA/MFH Owner must not consider increases in earned
income, when estimating or calculating whether the family’s adjusted income has
increased, unless the family has previously received an interim reduction during the same
reexamination cycle.
This lower threshold does not apply when the household does not add or remove a
household member but experiences other kinds of changes to existing household member
characteristics (e.g., a head of household turns 62 and the family becomes an elderly
family, or an adult member who is not the head, co-head, or spouse enrolls as a full-time
college student and becomes a dependent). Such changes should be reviewed under the
normal increase or decrease policies described in subtopics I.1 and I.2.
Example I3: Interim Reexaminations / Adding or Removing Household Members
Scenario A: A family with an annual adjusted income of $9,600 adds a minor household member and
becomes eligible for one dependent deduction totaling $480. This change would result in a 5% decrease
in the family’s annual adjusted income. Because HUD requires PHAs/MFH Owners to use a 0% threshold
when there is any change in household composition, an interim reexamination is required. The PHA/MFH
Owner adds the deduction at the same time as reporting the addition of the dependent to the family.
Scenario B: A family member moved out of the assisted unit. Because HUD requires PHAs/MFH Owners
to conduct an interim reexamination when there is any change in household composition, the PHA/MFH
Owner must process an interim reexamination to remove the family member and make any updates, if
needed, to the family’s annual adjusted income.
Scenario C: A foster adult moves into the assisted unit. Although the change in household composition
results in no change to the family’s annual adjusted income, the PHA/MFH Owner must process an
interim reexamination to include the foster adult and any other changes to the household.
Scenario D: The Williams family has an annual adjusted income of $25,000 and their annual
reexamination is coming up in two months. The head of household marries an elderly person, who is
added to the family. The family now qualifies as an elderly family which means they are eligible for the
Elderly/Disabled Family deduction of $525. The new family member has annual unearned income of
$5,400. The PHA/MFH Owner has established a policy to not conduct interim reexaminations for adjusted
income increases in the last three months of the recertification period. Even though the Williams family
added a new household member, the PHA/MFH Owner’s policy supersedes HUD’s requirement that a
PHA/MFH Owner conduct an interim reexamination for all household composition changes. Instead of
conducting an interim reexamination, the PHA/MFH Owner records the changes on the annual
reexamination.
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PHA/MFH Owner Discretion: None.
I.4 Interim Reexaminations to Determine Continued Public Housing Over-Income
Status
Regulations: 24 CFR § 960.507
Summary: In accordance with 24 CFR 960.507(c)(1), when a PHA determines that a
Public Housing family is over-income — whether through an annual or interim
reexamination — the PHA must provide written notice to the family no later than 30 days
after that initial determination.
Per 24 CFR 960.507(c), PHAs must then conduct follow-up income examinations at 12
and 24 months after the initial over-income determination, notifying the family if they
remain over the income limit at each interval. This requirement applies even if the family
is paying the flat rent (24 CFR 960.253). These follow-up examinations are not required
if the PHA has determined that the family's income fell below the over-income limit prior
to the applicable interval. Note that interim reexaminations conducted to evaluate over-
income status do not reset the family's normal annual reexamination date.
See Notice PIH 2023-03 (HA) for additional guidance on the required reexaminations
and notice for over-income Public Housing families.
Example I4: Interim Reexamination to Determine Continued Public Housing Over-Income Status
Scenario A: Uninterrupted Grace Period: The Blayney Family
In June 2024, the PHA processed an interim reexamination for the Blayney family effective 7/1/2024
due to an increase in the family’s annual adjusted income of 10 percent or more. The PHA sent written
notification of its initial determination that the family’s annual income exceeds the applicable over-
income limit. The 24-month grace period starts.
The PHA must conduct an interim reexamination 12 months later, or by 7/1/2025, to determine if the
Blayney family remains over-income, even if the family is paying a flat rent. The PHA must notify the
Blayney family that their income has exceeded the over-income limit for 12 consecutive months.
After completion of the 7/1/2025 interim reexamination, the Blayney family’s income continued to
exceed the applicable over-income limit for an additional 12 consecutive months. The PHA must
conduct a second interim reexamination, even if the family is paying flat rent, 24 months from the initial
determination, or by 7/1/2026, to determine if the family remains over-income.
At the 7/1/2026 interim reexamination, the Blayney family’s income continued to exceed the applicable
over-income limit. The PHA must either terminate their tenancy in no more than six months from the
end of the 24-consecutive-month grace period, by 1/1/2027, or charge them the alternative non–public
housing rent (at the next lease renewal or in no more than 60 days after the final notice, whichever is
sooner), depending on the PHA’s continued occupancy policies.
Scenario B: Interrupted Grace Period: The Morrison Family
The Morrison family experienced an income increase that resulted in an interim reexamination effective
2/1/2024. The family was sent the required written notification within 30 days of the PHA’s initial
determination of the family’s over-income status. The 24-month grace period starts.
The PHA must conduct an interim reexamination 12 months later, or by 2/1/2025, to determine if the
family remains over-income, even if the family is paying a flat rent.
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After completion of the interim reexamination effective 2/1/2025, the Morrison family remained over the
applicable over-income limit. The PHA must conduct a second interim reexamination, even if the family
is paying a flat rent, 24 months from the initial determination, or by 2/1/2026, to determine if the family
remains over-income. However, at a regularly scheduled annual reexamination effective 5/1/2025, the
family is determined to no longer be over-income. This is prior to the expiration of the 24-month grace
period on 2/1/2026. Thus, the grace period no longer applies, and the family remains an income-
eligible PH program participant.
If the family is determined to be over-income again in the future, they would be entitled to a new 24-
consecutive-month grace period.
PHA Discretion: None.
I.5 Non-Interim Reexamination Transactions
Regulations: 24 CFR §§ 5.657(c)(2); 882.515(b)(2)-(3); 891.105; 891.410(g)(2);
891.610(g)(2); 960.257(b)(2)-(3); and 982.516(c)(2)-(3)
Summary: Families may experience changes within the household that do not trigger an
interim reexamination under HOTMA but still need to be reported to HUD.
In these cases, PHAs will use the Interim Reexamination/Mid-Cycle Changes action code
on form HUD-50058 and specify that they are not conducting an interim reexamination
but must report other changes to HUD. Further instructions will be provided in the form
HUD-50058 Instruction Booklet.
MFH Owners must use the "O" code on form HUD-50059 for instances where a non-
interim transaction applies. Additional guidance will be provided through the TRACS
2.0.3.A MAT Guide to ensure MFH Owners distinguish non-interim submissions from
traditional interim reexamination submissions.
These instructions will be used for the following transaction types when an interim
reexamination is not triggered under the final rule or under the discretion HUD is
exercising through this notice:
Adding or removing a hardship exemption for the child-care expense deduction;
Updating or removing the phased-in hardship relief for the health and medical
care expense deduction and/or reasonable attendant care and auxiliary apparatus
expense deduction (the phased-in relief will begin at an eligible family’s first
annual or interim reexamination, whichever is sooner, at which the PHA/MFH
Owner is complying with HOTMA requirements);
Adding or removing general hardship relief for the health and medical care
expense deduction and/or reasonable attendant care and auxiliary apparatus
expense deduction;
Adding or removing a minimum rent hardship; and
Updating a family member’s citizenship status from eligible to ineligible or vice
versa, resulting in a change to the family’s rent and/or utility reimbursement, if
applicable (i.e., family begins receiving prorated assistance or previously prorated
assistance becomes full assistance), or updating the prorated rent calculation due
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to the addition or removal of family members in household with an ineligible
noncitizen(s).
HCV Program Only:
Processing contract rent changes that do not correspond with an interim or annual
reexamination (including PBV rent increases); and
Implementing an update to the payment standard that does not correspond with an
interim or annual reexamination.
MFH Programs Only:
Adding/updating a family or household member’s Social Security number. (PHAs
are instructed to instead use the Tenant ID Management module when adding or
updating a Social Security number.)
Note: PHAs/MFH Owners will make all other changes to assets, income, and deductions
at the next annual or interim reexamination of income, whichever is sooner.
I.6 Policies for Families to Report Changes to Annual Adjusted Income or Household
Composition
Regulations: 24 CFR §§ 5.657(c)(4); 882.515(b)(1)–(4); 882.808(i)(4); 891.105;
891.410(g)(2); 891.610(g)(2); 960.257(b)(4); and 982.516(d)
Summary: PHAs/MFH Owners must require families to report household composition
changes; however, PHAs/MFH Owners determine the timeframe in which reporting
happens. PHAs/MFH Owners must develop policies that describe when and under what
conditions families must report changes in annual adjusted income consistent with the
new requirements for processing interim reexaminations. PHAs/MFH Owners are
responsible for educating families on the requirements for reporting changes. Families are
responsible for reporting these changes to the PHA/MFH Owner. It is the PHA’s/MFH
Owner’s responsibility to track all reported changes to a family’s annual adjusted income
to ensure that the PHA/MFH Owner is correctly processing interim reexaminations in
accordance with HUD’s requirements.
A PHA’s/MFH Owner’s policies may require families to report only changes that the
family estimates meet the threshold for an interim reexamination, and the PHA/MFH
Owner must determine if an interim reexamination is necessary. Alternatively,
PHAs/MFH Owners may establish policies requiring that families report all changes in
income and household composition, and the PHA/MFH Owner will subsequently
determine if the change requires an interim reexamination.
PHA/MFH Owner Discretion: PHAs/MFH Owners have the discretion to develop
specific reporting policies that describe which changes must be reported to the
PHA/MFH Owner and the timeline for reporting the change. For example, PHAs/MFH
Owners may develop policies stipulating that families are not required to report any
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income increases that become effective within the last three months of the family’s
certification period, or PHAs/MFH Owners may develop policies requiring families to
report all changes to household composition, income, and deductions within 10 days of
the change.
I.7 Processing Time Period for Interim Reexaminations
Regulations: 24 CFR §§ 5.657(c)(1); 882.515(b)(1); 891.105; 891.410(g)(2);
891.610(g)(2); 960.257(b)(1); and 982.516(c)(1)
Summary: The updated regulations codified long-standing guidance on how long
PHAs/MFH Owners should take to process an interim reexamination.
When the PHA/MFH Owner conducts an interim reexamination, it must be conducted
within a reasonable period after the family’s request or after the PHA/MFH Owner
becomes aware of an increase in the family’s adjusted income. What qualifies as a
“reasonable time” may vary based on the amount of time it takes to verify information,
but the PHA/MFH Owner generally should conduct the interim reexamination not longer
than 30 days after the PHA/MFH Owner becomes aware of changes in income.
PHA/MFH Owner Discretion: None.
I.8 Effective Date of Interim Rent Changes
Regulations: 24 CFR §§ 5.657(c)(5); 882.515(b)(4)–(b)(5); 891.105; 891.410(g)(2);
891.610(g)(2); 960.257(b)(6); and 982.516(c)(4)
Summary: The updated regulation codified long-standing guidance on when interim
reexaminations are made effective.
Changes Reported Timely: If the family has reported a change in family income
or composition in a timely manner according to the PHA/MFH Owner’s policies,
then the PHA/MFH Owner must provide the family with a 30-day advance notice
of any rent increases, and such rent increases will be effective the first day of the
month beginning after the end of that 30-day period.
If the tenant has complied with the interim reporting requirement and the tenant’s
rent is anticipated to decrease, rent decreases will be effective on the first day of
the month after the date of the actual change leading to the interim reexamination
of family income. This means the decrease will be applied retroactively.
Changes Not Reported Timely: If the family has failed to report a change in
family income or composition in a timely manner according to the PHA/MFH
Owner’s policies, PHAs/MFH Owners must implement any resulting rent
increases retroactively to the first day of the month following the date of the
change leading to the interim reexamination of family income.
Any resulting rent decrease must be implemented no later than the first rent
period following completion of the reexamination. The PHA/MFH Owner may
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choose to adopt a policy that would make the effective date of an interim
reexamination retroactive to the first of the month following the date of the actual
decrease in income as opposed to the first of the month following completion of
the reexamination. PHAs/MFH Owners may also choose to establish conditions
or requirements for when such a retroactive application would apply (e.g., where
a family’s ability to report a change in income promptly may have been hampered
due to extenuating circumstances such as a natural disaster or disruptions to the
PHA/MFH Owner management operations).
PHAs/MFH Owners that choose to adopt such policies must ensure the earliest
date that the retroactive decrease is applied is the later of the first of the month
following the date of the change that led to the interim reexamination, or the first
of the month following the most recent previous income examination (i.e., most
recent interim or annual reexamination or the family’s initial examination if that
was the family’s only income examination before the interim reexamination in
question).
In applying a retroactive change in rent or family share as the result of an interim
reexamination, the PHA/MFH Owner must clearly communicate the effect of the
retroactive adjustment to the family so that there is no confusion over the amount
of the rent that is the family’s responsibility. In the HCV and Moderate
Rehabilitation/SRO programs, the PHA must also clearly communicate the effect
of the retroactive adjustment to the owner as well. These policies may reduce the
potential hardship on families and eliminate or significantly reduce the amount a
family may owe the PHA for back rent if the family has had difficulty in making
timely rent payments during the time between the loss of income and the interim
reexamination.
An exception to the requirement that a PHA/MFH Owner implement resulting
rent increases retroactively to the first of the month following the date of the
change leading to the interim reexamination exists if a PHA/MFH Owner failed to
process a family’s interim reexamination because the family did not timely report
an income decrease, as illustrated in example I5, scenario D, below.
Example I5: Effective Date of Interim Rent Changes
Scenario A: The Miller family had a decrease in family income that met the threshold due to the loss of
a job on 6/2/2024. They reported the decrease to the PHA/MFH Owner in accordance with the
PHA/MFH Owner’s policies on 6/15/2024. The interim reexamination must be effective 7/1/2024,
regardless of when the PHA/MFH Owner processes the interim reexamination.
Scenario B: The Leon family had an increase of 10 percent or more in annual adjusted income on
6/1/2024 due to receiving a new type of benefit income. The increased income meets the threshold to
require an interim. They reported the increase to the PHA/MFH Owner in accordance with local policies
on 6/20/2024. The PHA/MFH Owner did not process the interim reexamination until 7/11/2024, so the
effective date of the interim reexamination is 9/1/2024 to give the family the required 30-day notice of
the increase in total tenant portion.
Scenario C: The head of the Nguyen family began receiving Social Security income starting on
8/1/2024. The increased income meets the threshold to require an interim reexamination. However, the
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change in income was not reported to the PHA/MFH Owner until 9/15/2024. The PHA/MFH Owner has
a policy requiring a family to report changes in family income within 30 days. Because the family failed
to alert the PHA/MFH Owner of the increase in income in accordance with the PHA/MFH Owner’s
policy, the increased income is effective retroactive to 9/1/2024, the first of the month following the date
of the income change.
Scenario D: The Housseini family’s current annual reexamination is effective on 2/1/2024. A member
of the Housseini family lost their job on 1/2/2024, but the family failed to report the change until
4/5/2024. If the PHA/MFH Owner has a written policy allowing for retroactive rent decreases even
when the family does not report changes timely, the retroactive rent decrease could be applied on
3/1/2024 (the first of the month following the family’s most recent previous income examination).
PHA/MFH Owner Discretion: PHAs/MFH Owners must establish policies describing
when and under what conditions a family is required to report changes in family income
or composition in order to meet the “timely manner” requirement. PHAs/MFH Owners
must update their Administrative Plans, ACOPs, or Tenant Selection Plans, as applicable,
to include these policies and must communicate them clearly to participating families.
PHAs/MFH Owners may adopt a policy to apply rent decreases retroactively for
circumstances in which families fail to report changes in a timely manner. A retroactive
rent decrease may not be applied prior to the later of either the first of the month
following the date of the actual decrease in income, or the first of the month following
the most recent previous income examination. PHAs/MFH Owners may establish
additional criteria to describe the conditions under which retroactive decreases will be
applied (e.g., the kinds of extenuating circumstances that may inhibit timely reporting). In
all cases of retroactive application, the PHA/MFH Owner must clearly communicate to
the family how the retroactive adjustment will affect their responsibility for rent. In the
HCV and Moderate Rehabilitation programs, the PHA must also clearly communicate the
impact of the retroactive adjustment to the owner.
I.9 Streamlined Income Determination
Regulation: 24 CFR §§ 5.609(c)(2)(i); 5.657(d); 891.105; 891.410(g)(4); 891.610(g)(4);
960.257(c); and 982.516(b)
Summary: HOTMA did not update or otherwise change the streamlined income
determination provision codified in the FAST ActI3 and in HUD’s regulations found in 24
CFR §§ 5.657(d), 960.257(c), and 982.516(b); however, PHAs/MFH Owners should be
aware that the adjustments of non-fixed income sources at annual reexamination using
third-party verification must follow the HOTMA income calculation rules outlined in
Attachment B (Calculating Income) of this notice.
Under current program regulations, PHAs/MFH Owners may elect to apply a streamlined
income determination for families receiving fixed incomeI4 using the methodology below.
For any income determined pursuant to a streamlined income determination, a PHA/MFH
Owner must obtain third-party verification of all income amounts every 3 years.
I3
P.L. 114–94.
I4
24 CFR §§ 5.657(d)(2); 960.257(c)(2); 982.516(b)(2); 891.410(g)(4); and 891.610(g)(4).
109
When 90 percent or more of a family’s unadjusted income consists of fixed income,
owners using streamlined income determinations must apply a COLA or COLAs to the
family’s fixed-income sources, provided that the family certifies both that 90 percent or
more of their unadjusted income is fixed income and that their sources of fixed income
have not changed from the previous year. Sources of non-fixed income need not be
adjusted and must not be adjusted by a COLA, but PHAs/MFH Owners may choose to
adjust sources of non-fixed income by the amount determined on the basis of third-party
verification. PHAs/MFH Owners have the discretion to either adjust the non-fixed
income or carry over the calculation of non-fixed income from the first year to years 2
and 3. Adjustments to non-fixed income must be calculated in accordance with section
B.2 (Annual Reexamination) of this notice.
When less than 90 percent of a family’s unadjusted income consists of fixed income,
owners using streamlined income determinations must apply a COLA to each of the
family’s sources of fixed income. Owners must determine all other income pursuant to
section B.2 (Annual Reexaminations) of this notice.
The table below explains the applicable PHA/MFH Owner action at each point in time in
the streamlining cycle.
Table I1: PHA/MFH Owner Action at Point in Time in Streamlining Cycle
Point in Time in
PHA/MFH Owner Action
Streamlining Cycle
Year 1 PHA/MFH Owner completes a Move in, Initial Certification (MFH Only) or
Annual Reexamination consistent with the regulations on reexaminations.
Years 2 and 3 PHA/MFH Owner completes an Annual Reexamination with the following
streamlined income determination for each type of source:
Fixed Income: Apply inflation adjustment factor; PHA/MFH Owner does
not collect third-party verification.
Non-fixed income when fixed income is more than 90 percent of
unadjusted income: PHA/MFH Owner has discretion to either adjust
the income using third-party verification or use the previous year’s
calculation.
Non-fixed income when fixed income is less than 90 percent of
unadjusted income: PHA/MFH Owner must adjust the income using
third-party verification.
Assets and Deductions: PHA/MFH Owner completes verification and
calculation of assets and deductions.
Year 4 Three-year cycle starts over.
PHA/MFH Owner Discretion: PHAs/MFH Owners have the discretion to implement
streamlined income determinations under current program regulations.
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I.10 Impact of Interim Reexamination Requirements on Family Self-Sufficiency (FSS)
Programs
Summary: PHAs/MFH Owners who operate FSS programs should note two effects that
the new interim reexamination regulations will have on families participating in their FSS
programs.
First, HOTMA requires that interim reexaminations must be conducted: (1) when a
family’s income decreases by at least 10 percent of their annual adjusted income, or such
lower threshold established by a PHA/MFH Owner or by HUD through notice; (2) when
a family’s income increases by at least 10 percent of their annual adjusted income or such
other amount established by HUD through notice, except in certain circumstances as
described earlier in subtopic I.2 (Increases in Annual Adjusted Income) of this notice; or
(3) when there is any change in household composition (i.e., a family adds or removes a
household member), except in certain circumstances as described in Subtopic I.3
(Changes in Household Composition) of this notice. PHAs/MFH Owners may not
consider any increases in earned income when estimating or calculating whether the
family’s annual adjusted income has increased unless the family has previously received
an interim reduction during the same reexamination cycle. Families participating in the
FSS program are subject to these interim requirements, therefore their escrow accounts
may not grow as their earnings increase throughout the year.
Second, the Streamlining and Implementation of Economic Growth, Regulatory Relief,
and Consumer Protection Act Changes to Family Self-Sufficiency Program final rule (87
FR 30020) states that the FSS contract of participation (COP) will generally expire 5
years from the date of the family’s first re-certification of income after the effective
date of the FSS COP. The PHA/MFH Owner may not perform an interim reexamination
of annual income when enrolling a family in the FSS program unless the family
experienced a change in annual adjusted income that meets the threshold for conducting
an interim reexamination under the HOTMA final rule. Families for whom their first
reexamination of income does not occur until their regularly scheduled annual
reexamination will not have the opportunity to begin escrowing their increased earnings
until that time and may have fewer escrow increases over the life of the 5-year contract.
Although families participating in FSS may experience fewer escrow increases under the
HOTMA final rule, the revised interim reexamination regulations may provide these
families the opportunity to use their increased earnings to realize other short- or long-
term goals.
PHA/MFH Owner Discretion: None.
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ATTACHMENT J: TOPIC: VERIFICATION
Regulations
24 CFR §§ 5.216(g)(1); 5.230; 5.230(c)(5)(iii); 5.232; 24 CFR 5.232(c); 5.233; 5.240(c);
5.609(c)(3); 5.659(d); 891.105; 891.410(b)-(c) and (g); 891.610(b)-(c) and (g); 891.750;
960.259(c); and 982.516(a)(2)
Applicable Programs
HUD Multifamily Housing HUD Multifamily Housing Public and Indian Housing
Section 8 (Project Based Rental Section 202/162 PAC, Section HCV (including Project-Based
Assistance) 202/8, Section 202/811 PRAC, vouchers), Public Housing, Section
Section 236 IRP, Section 811 PRA, 8 Moderate Rehabilitation, Section
SPRAC 8 Moderate Rehabilitation SRO
Yes Yes Yes
Summary
The final rule updated verification of income requirements in 24 CFR §§ 5.230; 5.232; 5.233;
5.609; and 5.659.
Subtopics
J.1 Authorization for the Release of Information (Forms HUD–9886/HUD–9887)
Regulations: 24 CFR §§ 5.230; 5.232; 891.105; 891.410(b)-(c); and 891.610(b)-(c)
Summary: In accordance with the final rule, all applicants must sign the consent form at
admission, and participants must sign the consent form no later than their next interim or
regularly scheduled income reexamination. After an applicant or participant has signed
and submitted a consent form either on or after January 1, 2024 (regardless of the
PHA/MFH Owner’s compliance date), they do not need to sign and submit subsequent
consent forms at the next interim or regularly scheduled income examination except
under the following circumstancesJ1:
When any person 18 years or older becomes a member of the family;
When a member of the family turns 18 years of age; and
As required by HUD or the PHA in administrative instructions.
These consent forms contain provisions authorizing HUD and the PHA/MFH Owner to
obtain necessary information for verification of an application or to maintain a family’s
assistance, including income information and tax return information. The executed
consent forms will remain effective until the family is denied assistance, the assistance is
terminated, or if the family provides written notification to the PHA/MFH Owner to
J1
Any person, regardless of age, who subsequently becomes a family member as the head of household, co-head of
household, or spouse, must sign the consent form, in accordance with 24 CFR § 5.230(a).
112
revoke consent. If a family voluntarily leaves a HUD program, the family's assistance is
considered to be terminated and the signed consent forms will no longer be in effect.
HUD will publish a new form HUD–9886–A and is updating forms HUD–9887 and
HUD–9887–A (Fact Sheet) to conform with the final rule. HUD will include language in
the forms allowing PHAs/MFH Owners to obtain financial records from financial
institutions whenever the PHA/MFH Owner determines that such a record is needed to
determine an applicant’s or participant’s eligibility for assistance or level of benefits.
PHA/MFH Owner Discretion: PHAs/MFH Owners have the discretion to establish
policies around when family members must sign the consent forms when they turn 18
between reexaminations. PHAs/MFH Owners must establish these policies in their
ACOPs, Administrative Plans, and Tenant Selection Plans, if requiring family members
to sign consent forms at intervals other than at reexamination.
J.2 Revocation of Consent
Regulations: 24 CFR §§ 5.230(c)(5)(iii); 24 CFR 5.232(c); 891.105; 891.410(g)(3)(ii);
and 891.610(g)(3)(ii)
Summary: The executed consent forms will remain effective until the family is denied
assistance, the assistance is terminated, or if the family provides written notification to
the PHA/MFH Owner to revoke consent. Revocation of consent or refusal to sign the
consent forms prohibits the PHA/MFH Owner from requesting and accessing income
information and financial records, including pulling EIV reports and using the EIV data
to verify income (although the data matches between HUD and other agencies will
continue to occur automatically if the family is not terminated from the program).
PHAs/MFH Owners will not be able to process interim or annual reexaminations of
income, including when a family’s income decreases and the family requests an interim
reexamination to decrease tenant rent, without the family’s executed consent form(s).
Families have the right to revoke consent by providing written notice to the PHA/MFH
Owner; however, revoking consent may result in termination of assistance or denial of
admission, if the PHA/MFH Owner has a policy that the revocation of consent will result
in termination of assistance or denial of admission. When PHAs/MFH Owners do not
establish such a policy, the family is required to sign a new consent form by the next
reexamination, whichever occurs first, in order to avoid termination of assistance or be
reviewed for eligibility for admission. PHAs/MFH Owners must explain to families the
consequences, if any, of revoking their consent.
PHAs/MFH Owners must notify their local HUD office of a family’s revocation of
consent.
PHA/MFH Owner Discretion: PHAs/MFH Owners may decide whether revocation of a
family’s consent will result in termination of assistance or denial of admission. Such a
policy must be included in the PHA/MFH Owner’s Administrative Plan, ACOP, or
Tenant Selection Plan, as applicable.
J.3 Mandated and Discretionary use of HUD’s Enterprise Income Verification (EIV)
System
Regulation: 24 CFR § 5.233
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Summary: The regulation clarifies that PHAs/MFH Owners must use EIV to verify
tenant employment and income information at annual and streamlined reexaminations of
family composition and income. However, PHAs/MFH Owners are no longer required to
use EIV to verify tenant employment and income information during an interim
reexamination of family composition and income.
PHAs/MFH Owners are still required to use EIV in its entirety, including using all of the
required reports, such as the Existing Tenant Search and Income Reports, to verify tenant
employment and income information at all other times.
Note: HUD intends to update the discrepancy logic for the MFH and Public Housing
Income Discrepancy Reports and the Income Verification Tools (IVTs) to conform to the
requirements of the final rule. PHAs/MFH Owners are not required to investigate
discrepancies resulting from the MFH and Public Housing Income Discrepancy Reports
and the IVT Tools until HUD updates the discrepancy logic. HUD will notify
PHAs/MFH Owners when the new reports are ready for use.
Table J1 provides guidance on the frequency with which individual EIV reports must be
utilized by a PHA/MFH Owner.
Table J1: Mandatory and Discretionary Use of EIV by PHAs/MFH Owners
PHAs/MFH
Report Title Report Description Frequency of Use
Owners
At the time of processing
Allows users to access
an applicant family for PHAs only
information concerning
Debts Owed to admission, and to enter
former tenants who left Report does
PHAs & debt information or
owing a debt to a PHA or not exist in
Terminations terminations for families
who had their voucher MFH EIV.
who have ended program
terminated for cause.
participation.
Identifies tenants reported
Deceased by Social Security PHAs/MFH
At least quarterly
Tenants Report Administration (SSA) as Owners
being deceased.
Identifies applicants who
At the time of processing
Existing Tenant may be receiving assistance PHAs/MFH
an applicant family for
Search at another Multifamily project Owners
admission
or PIH location.
Identifies tenants who have
missing or invalid personal
Failed EIV identifiers (last name, date of
PHAs/MFH
Prescreening birth, SSN) in HIP/TRACS. Monthly
Owners
Report These tenants will not be
sent to SSA from EIV for the
SSA identity test.
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Identifies tenants whose
personal identifiers (last
name, date of birth, SSN) do
not match the SSA
Failed database.
Verification
*PHAs/MFH Owners that PHAs/MFH
Report (Failed Monthly
admit families using a self- Owners
SSA Identity
Test) certification of SSN must
review the Failed SSN
Verification Report monthly
to identify and follow up on
new issues.
Identity Identifies tenants that, failed
PHAs/MFH
Verification SSA verification, and failed Monthly
Owners
Report EIV pre-screening.
Must be used at annual
Identifies households where reexamination. MFH
there is an income Owners may use the report
discrepancy in the wage, at other intervals, in
unemployment, and SSA accordance with the MFH
benefit information reported Owner’s written EIV
in EIV and wage, policies and procedures.
unemployment, and SSA MFH Owners are not
Income
benefit information reported required to use the report
Discrepancy MFH
in TRACS for the period of at annual reexamination if
Report for MFH Owners
income used for discrepancy they used Safe Harbor
Programs
analysis. The report serves verification to determine
as a tool to alert MFH the family’s income at the
Owners that there may be a last reexamination.
discrepancy in the income
reported by the tenant during *See note under Summary
the period of income used above about updates to the
for the discrepancy analysis. MFH Income Discrepancy
Report.
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Must be used at annual
reexamination; not required
at interim reexaminations.
Provides employment and PHAs/Owners may use, if
income reported by HHS desired. PHAs/MFH
and SSA for each household Owners are not required to
member that passes the use at annual
Income SSA identity test. reexamination if they use
Information for Safe Harbor verification to
PIH Programs Identifies tenants who: determine the family’s PHAs/MFH
Income Report May not have reported income. Owners
for MFH complete and accurate New Admissions:
Programs income information;
and/or Review new admissions
within 120 days after the
May be receiving move-in information is
multiple subsidies. transmitted to HUD to
confirm/validate the income
reported by the
household.J2
PHAs are required to
obtain an EIV Income and
Income Validation Tool
Report for each family any
time the PHA conducts an
annual reexamination of
Provides projections of family income and
discrepant income for composition. PHAs may
wages, unemployment use the report at other
compensation, and SSA intervals, in accordance
Income benefits pursuant to HUD’s with the PHA’s ACOP or
Validation Tool data sharing agreements Administrative Plan. PHAs
are not required to use the PHAs
Report for PIH with the Department of
Programs Health and Human Services report at annual
(HHS) using the National reexamination if they used
Directory of New Hires Safe Harbor verification to
(NDNH) database, and the determine the family’s
SSA. income at the last
reexamination.
*See note under Summary
above about updates to the
MFH and Public Housing
Income Discrepancy
Reports.
J2
PHAs/MFH Owners must rely on other documents (e.g., pay stubs, benefit award letters, etc.) to verify families’
income eligibility before admission.
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Identifies tenants who may
Multiple Subsidy be receiving rental PHAs/MFH
At least quarterly
Report assistance at more than one Owners
location.
PHAs/MFH Owners must
review this information at
annual reexamination
except when the PHA/MFH
Owner uses Safe Harbor
verification to determine
the family’s income.
PHAs/MFH Owners that do
not require families to
undergo interim
Identifies tenants who have reexaminations (IRs) for
New Hires new employment within the income increases after an PHAs/MFH
Report last six months. Report is IR decrease do not need to Owners
updated monthly. review this report at all
between a family’s annual
reexamination. If the
PHA/MFH Owner’s policy
is to require an IR for
increases in income after
an IR decrease, then the
PHA/MFH Owner must
review the report quarterly
after the family’s IR
decrease.
Identifies tenants who
passed the SSA identity test
but where no income was
reported by HHS or SSA. As identified in a PHA’s
No Income This scenario does not mean ACOP or Administrative
PHAs/MFH
Reported by that the tenant does not Plan or a MFH Owner’s
Owners
HHS or SSA have any income. written EIV policies and
PHAs/MFH Owners must procedures.
obtain written, third-party
verification of any income
reported by the tenant.
No Income Identifies households where As identified in MFH
MFH
Reported on there is no income listed on Owner’s written EIV
Owners
50059 the HUD–50059. policies and procedures.
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Must be used at annual
reexamination; not required
Summary of household at interim reexaminations.
information from the current, MFH Owners may use the
Summary MFH
active certification in the report at other intervals, if
Report Owners
TRACS file at the time of the desired, as described in
income match. the MFH Owner’s written
EIV policies and
procedures.
PHA/MFH Owner Discretion: PHAs/MFH Owners may choose to use EIV to verify
tenant employment and income information at interim reexaminations of family
composition and income. PHAs that choose to use EIV to verify income information at
interim reexaminations must include this information in the PHA’s ACOP and/or
Administrative Plan. MFH Owners who choose to use EIV to verify tenant employment
and income information at interim reexaminations must establish this policy in their
written EIV policies and procedures. Any policy adopted by a PHA/MFH Owner must be
applied consistently for all households.
J.4 Determination of Income Using Other Means Tested Public Assistance (i.e., “Safe
Harbor”)
Regulation: 24 CFR §§ 5.609(c)(3) and 891.105; 891.410(b)-(c) and (g); and
891.610(b)-(c) and (g)
Summary: PHAs/MFH Owners may determine a family’s annual income, including
income from assets, prior to the application of any deductions based on income
determinations made within the previous 12-month period, using income determinations
from the following types of means-tested federal public assistance programs:
The Temporary Assistance for Needy Families block grant (42 U.S.C. 601, et seq.).
Medicaid (42 U.S.C. 1396 et seq.).
The Supplemental Nutrition Assistance Program (42 U.S.C. 2011 et seq.).
The Earned Income Tax Credit (26 U.S.C. 32).
The Low Income Housing Tax Credit (26 U.S.C. 42).
The Special Supplemental Nutrition Program for Woman, Infants, and Children (42
U.S.C. 1786).
Supplemental Security Income (42 U.S.C. 1381 et seq.).
Other programs administered by the Secretary.
Other means-tested forms of federal public assistance for which HUD has established
a memorandum of understanding.
Other federal benefit determinations made by other means-tested federal programs
that the Secretary determines to have comparable reliability and announces through a
Federal Register notice.
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If a PHA/MFH Owner elects to use the annual income determination from one of the
above-listed forms of means-tested federal public assistance, then they must obtain the
income information by means of a third-party verification. The third-party verification
must state the family size, must be for the entire family (i.e., the family members listed in
the documentation must match the family’s composition in the assisted unit, except for
household members), and must state the amount of the family’s annual income. The
annual income need not be broken down by family member or income type. Annual
income includes income earned from assets, therefore when using Safe Harbor to verify a
family’s income, PHAs/MFH Owners will neither further inquire about a family’s net
family assets, nor about the income earned from those assets, except with respect to
whether or not the family owns assets that exceed the asset limitation in 24 CFR § 5.618.
The Safe Harbor verification may be in the form of an award letter from the relevant
federal program and must show that the family’s income determination was made in the
previous 12 months. HUD clarifies in this notice that the verification will be considered
acceptable if the documentation meets the criteria that the income determination was
made within the 12 months prior to the receipt of the verification by the PHA/MFH
Owner. This satisfies all verification date requirements for Safe Harbor income
determinations.
The Safe Harbor documentation will be considered acceptable if any of the following
dates fall into the 12-month period prior to the receipt of the documentation by the
PHA/MFH Owner:
Income determination effective date;
Program administrator’s signature date;
Family’s signature date;
Report effective date; or
Other report-specific dates that verify the income determination date.
The only information that PHA/MFH Owners are permitted to use to determine income
under this Safe Harbor is the total income determination made by the federal means-test
program administrator. Other federal programs may provide additional information about
income inclusions and exclusions in their award letters; however, these determinations
and any other information must not be considered by the PHA/MFH Owner for purposes
of the HOTMA Safe Harbor provision. PHAs/MFH Owners are not permitted to mix and
match Safe Harbor income determinations and other income verifications.
The amounts of unreimbursed reasonable attendant care expenses and child-care
expenses deducted from a family’s annual income, except for when a family is approved
for a child-care expense hardship exemption, must still be capped by the amount earned
by any family member who is enabled to work as a result of the expense. PHAs/MFH
Owners are therefore required to obtain third-party verification of the applicable
employment income and cap the respective expense deductions accordingly.
It is anticipated that in many cases tenants will provide the PHA/MFH Owner with the
Safe Harbor third-party verification for the purpose of reexamination, rather than the
PHA/MFH Owner mailing a verification form to the third party to complete. If the
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PHA/MFH Owner does not accept Safe Harbor documentation, is unable to obtain Safe
Harbor documentation, or if the family disputes the other program’s income
determination, the PHA/MFH Owner must calculate the family’s annual income using the
methods established in § 5.609(c)(1) and (2).
If the PHA/MFH Owner uses a Safe Harbor determination to determine the family’s
income for an income examination (New Admission/Move Ins, Initial Certification for
MFH programs only, Interim Reexamination, or Annual Reexamination), then the family
is obligated to report changes in income that meet the reporting requirement and occur
after the effective date of the PHA/MFH Owner’s transaction. This might mean that a
certain source of income was not considered in the family’s income, because the other
program does not consider the source to be income. For example, if the family begins
receiving a new source of income on 2/1/2024 and the PHA/MFH Owner completed an
annual reexamination effective 3/1/2024 using a Safe Harbor income determination, then
the family does not need to report that change in income. If the family has a change in
adjusted income in accordance with HUD’s rules that occurs after 3/1/2024, when the
Annual Reexamination was effective, then the family must report the change to the
PHA/MFH Owner.
Example J1: Acceptable Verification of Safe Harbor
Background: A PHA/MFH Owner decides to implement the Safe Harbor provision, and their policy
states that they will accept income determinations from the Supplemental Nutrition Assistance Program
(SNAP). At the Smith family’s annual reexamination interview, the Smiths provide the reexamination
specialist an original print-out from the agency that administers SNAP benefits. The printout reflects the
Smith’s correct family size of 4, and current household composition, and it states the total amount of
the family’s earned income. The annual income is $19,500 ($812.50 x 24 semi-monthly pay periods).
The print-out was dated 30 days prior to the PHA/MFH Owner’s request, and the income was
determined six months ago.
SNAP Budget Calculation (from State Department of Social Services)
Report Date: 05/17/2024
Head of Household: Smith, Hunter
Home Address: 123 Main Street, USA
Household members:
Last Name First Name Date of Birth Relationship
Smith Hunter 01/01/1974 Head of Household
Smith Annabelle 06/18/1976 Spouse
Smith Lola 05/17/2019 Daughter
Smith Eric 05/17/2019 Son
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Budget Calculation
Monthly Earned Income: $1,625
Total Unearned Income: $0
Standard Deduction: $112.50
Monthly child care/dependent care: $50
Allowable medical deductions: $0
Result: The PHA/MFH Owner may use this printout to determine the Smith’s annual income for their
annual reexamination. The PHA/MFH Owner lists $19,500 as the annual income for the family’s
reexamination ($1,625 monthly earned income + $0 unearned income x 12 months). The PHA/MFH
Owner does not need to take any additional steps to verify or calculate gross annual income, including
comparing the income determination to EIV data. The PHA would then verify and apply applicable
deductions to calculate the family’s annual adjusted income.
PHA/MFH Owner Discretion: PHAs/MFH Owners are not required to accept or use
determinations of income from other federal means-tested forms of assistance.
PHAs/MFH Owners must establish in policy whether and when they will accept Safe
Harbor income determinations (e.g., at reexamination only or at admission and
reexamination), including which programs from which they will accept income
determinations. PHAs/MFH Owners must also create policies that outline the course of
action when families present multiple verifications from the same or different acceptable
Safe Harbor programs (e.g., to accept the most recent income determination). These
policies must be included in the PHA’s/MFH Owner’s ACOP, Administrative Plan, or
Tenant Selection Plan, as applicable.
J.5 Verification Hierarchy
Regulation: 24 CFR §§ 5.240(c); 5.659(d); 891.105; 891.410(b)-(c) and (g); 891.610(b)-
(c) and (g); 960.259(c); 982.201(e); and 982.516(a)(2)
Summary: PHAs/MFH Owners are responsible for obtaining third-party verification of
reported family annual income, the value of assets, expenses related to deductions from
annual income, and other factors that affect the determination of adjusted income. Third-
party verification is a process by which PHAs/MFH Owners gather information (e.g.,
about the family’s annual income, value of assets, etc.) independently from the source of
the income, assets, expenses, or other factors that affect the determination of adjusted
income. Third-party verification may be obtained directly from the third party or through
the family. PHAs/MFH Owners must document in the tenant file the reason why third-
party verification was not available unless HUD’s regulations specifically permit families
to self-certify a particular component of adjusted income.
HUD developed a hierarchy (see table J2, below) that describes verification
documentation from most acceptable to least acceptable. The PHA/MFH Owner must
demonstrate efforts to obtain third party verification prior to accepting self-certification
except instances when self-certification is explicitly allowed (e.g., net family assets that
do not exceed $50,000).
A description of each verification technique and additional guidance follows Table J2.
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Table J2: Verification Hierarchy
Level Verification Technique Ranking/Order of Acceptability
Upfront Income Verification (UIV), Highest
using HUD’s Enterprise Income
PHAs/MFH Owners must pull the EIV Income Report for
Verification (EIV) system
each family at every Annual Reexamination, unless
using Safe Harbor documentation to verify the family’s
income
6
EIV may be used as the sole verification of Social
Security income.
EIV income information may be used to calculate other
types of annual income when family agrees. See Level
4 for more information.
Upfront Income Verification (UIV) Highest
using non-EIV system (e.g., The
5
Work Number, web-based state
benefits systems, etc.)
Written, third-party verification from the High
source, also known as “tenant-provided
verification” Written, third-party verification is used when tenant
disputes EIV-reported employment and income
OR information.
EIV + Self-Certification The EIV Income Report may be used to verify and
PHAs/MFH Owners can choose either calculate income if the family self-certifies that the
4 amount is accurate and representative of current
option when both are available to verify
income. PHAs/MFH Owners must use income. The family must be provided with the
written, third-party verification when the information from EIV.
income type is not available in EIV
(e.g., self-employment, Go Fund Me
accounts, general public assistance,
Veterans Administration benefits, etc.)
Written, Third-Party Verification Form Medium
Use if Level 5 or Level 4 verification is not available
or is rejected by the PHA/MFH Owner and when the
applicant or tenant is unable to provide acceptable
3 documentation.
May substitute Level 2 for written, third-party
verification form, only completing one of the two
forms of verification before moving to self-
certification.
2 Oral Third-Party Verification Medium
Self-Certification (not third-party Low
verification)
1 Use as a last resort when unable to obtain any type
of third-party verification or if specifically permitted,
such as to determine actual income from assets
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when the family certifies that net family assets do not
exceed $50,000.
May be used as highest form of verification when the
family reports zero income.
J.5.a Third-Party Verification Descriptions and Guidance
Upfront Income Verification (UIV) (Level 6/5): The verification of income
before or during a family reexamination, through an independent source that
systematically and uniformly maintains income information in computerized
form for a number of individuals. It should be noted that the EIV system is
available to all PHAs/MFH Owners as a UIV technique and that all
PHAs/MFH Owners are required to use EIV in its entirety (see paragraph J.3
on Mandated and Discretionary Use of EIV). PHAs/MFH Owners are
encouraged to continue using other non-HUD UIV tools, such as The Work
Number (an automated verification system) and state government databases,
to verify tenant-reported income.
Written, Third-Party Verification (Level 4): An original or authentic
document generated by a third-party source dated within 120 days of the date
received by the PHA/MFH Owner. For fixed-income sources, a statement
dated within the appropriate benefit year is acceptable documentation.
Such documentation may be in the possession of the tenant (or applicant) and
is commonly referred to as tenant-provided documents. PHAs/MFH Owners
may obtain any tenant-provided documents and follow up directly with the
third-party source to obtain necessary verification of information, when
necessary.
Examples of acceptable tenant-provided documentation (generated by a third-
party source) include but are not limited to the following: pay stubs, payroll
summary report, employer notice/letter of hire/termination, SSA benefit
verification letter, bank statements, child support payment stubs, welfare
benefit letters and/or printouts, and unemployment monetary benefit notices.
PHAs/MFH Owners are required to obtain a minimum of two current and
consecutive pay stubs for determining projected annual income from wages
when they are relying on pay stubs for Level 4 documentation. MFH Owners
were previously required to collect the most recent four to six weeks of pay
stubs to verify employment income. For new income sources or when two pay
stubs are not available, the PHA/MFH Owner should determine income based
on the information from a traditional written, third-party verification form or
the best available information.
Income tax returns with corresponding official tax forms and schedules
attached and including third-party receipt of transmission for income tax
return filed (i.e., tax preparer’s transmittal receipt, summary of transmittal
from online source, etc.) are an acceptable form of written, third-party
verification.
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When verification of assets is required, PHAs/MFH Owners are required to
obtain a minimum of one statement that reflects the current balance of
banking/financial accounts. MFH Owners were previously required to average
the balance of six checking account statements to determine the cash value of
a checking account.
EIV may be used as Level 4 verification and may be used to calculate income
as long as the family agrees with the information in EIV; this practice is
known as “EIV + Self-Certification.” The PHA/MFH Owner may use their
discretion to determine which method of calculation is reasonable: the last 4
quarters combined or an average of any number of quarters. The EIV Income
report must be pulled within 120 days prior to the reexamination effective
date.
Written, Third-Party Verification Form (Level 3): This practice is also
known as “traditional third-party verification.” This type of verification is a
form developed by the PHA/MFH Owner and used uniformly for all families
when needed to collect information from a third-party source. The form is
completed by the third party by hand (in writing or typeset). PHAs/MFH
Owners send the form directly to the third-party source by mail, fax, or email.
The PHA/MFH Owner may skip this level of verification before attempting
Level 2, which means they will have only completed Level 3 or Level 2
verification before moving to Self-Certification.
Oral Third-Party Verification (Level 2): Independent verification of
information by contacting the individual income/expense source(s), as
identified through the UIV technique, or identified by the family, via
telephone or in-person visit. PHA/MFH Owner staff must document in the
tenant file the date and time of the telephone call (or visit to the third party)
and the name of the person contacted and their telephone number, along with
the confirmed information.
This verification method is commonly used when the independent source does
not respond to the PHA/MFH Owner’s faxed, mailed, or e-mailed request for
information in a reasonable time frame (e.g., 10 business days).
The PHA/MFH Owner may skip this level of verification if they attempted
Level 3, which means they will have only completed Level 3 or Level 2
verification before moving to Self-Certification.
Non-Third-Party Verification Technique: Self-Certification (Level 1):
The tenant submits a signed statement of reported income and/or expenses to
the PHA/MFH Owner. This verification method should be used as a last resort
when the PHA/MFH Owner has not been successful in obtaining information
via all other required verification techniques. When the PHA/MFH Owner
relies on self-certification to verify income or expenses, the PHA/MFH Owner
must document in the tenant file why third-party verification was not
available.
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HUD does not require that a self-certification be notarized; however, HUD
recommends including language on any self-certification to ensure the
certifier understands the consequences of knowingly providing false
information.
Sample language to use in a self-certification: “I/We, the undersigned, certify
under penalty of perjury that the information provided here is true and correct,
to the best of my knowledge and recollection. WARNING: Anyone who
knowingly submits a false claim or knowingly makes a false statement is
subject to criminal and/or civil penalties, including confinement for up to 5
years, fines, and civil and administrative penalties. (18 U.S.C. 287, 1001,
1010, 1012; 31 U.S.C. 3279, 3802)”
J.6 Verification of Social Security Number (SSN)
Regulation: 24 CFR § 5.216(g)(1) 891.105; 891.410(b)-(c) and (g); 891.610(b)-(c) and
(g)
Summary: It has become increasingly difficult for applicants to meet HUD’s SSN
disclosure requirements, particularly for those individuals experiencing homelessness. To
help protect individuals’ privacy, many federal, state, and local agencies no longer print an
individual’s SSN on official documentation. Individuals may be required to visit their
local Social Security office and provide original identity documentation in order to obtain
a replacement Social Security card.
HUD is adjusting what the Department considers acceptable documentation of SSN
under 24 CFR § 5.216(g)(1) to make it easier for applicants to access programs even if
they do not have access to their Social Security card or other documentation acceptable to
HUD. PHAs/MFH Owners must still attempt to gather third-party verification of SSN
prior to admission; however, they will also have the option of accepting a self-
certification and a third-party document with the applicant’s name printed on it to satisfy
the SSN disclosure requirement if the PHA/MFH has exhausted all other attempts to
obtain the required documentation. HUD has provided similar flexibility to PHAs
through the CARES Act waivers and for Emergency Housing Vouchers.
HUD prescribes, through this notice and in accordance with 24 CFR 5.216(g)(1)(iii), that
the following evidence of SSN is acceptable only after the PHA/MFH Owner has
attempted to first obtain a valid SSN card issued by the SSA or an original document
issued by a federal or state government agency that contains the name of the individual
and the SSN of the individual, along with other identifying information of the individual:
Self-certification of SSN and at least one third-party document, such as a bank
statement, utility or cell phone bill, benefit letter, etc., that contains the name of the
individual.
If verifying an individual’s SSN using this method, the PHA/MFH Owner must
document why the other SSN documentation was not available.
If the tenant’s SSN becomes verified in EIV, then no further verification is required. If
the tenant’s SSN fails the SSA identity match, then the PHA/MFH Owner must obtain a
valid SSN card issued by the SSA or an original document issued by a federal or state
government agency that contains the name of the individual and the SSN of the
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individual, along with other identifying information of the individual. The tenant’s
assistance must be terminated if they fail to provide the required documentation.
J.7 Verification of Excluded Income
To reduce administrative burdens on PHAs/MFH Owners, HUD is providing guidance
and clarification on the requirements for verifying excluded income.
For income sources where the entire amount qualifies to be excluded from the annual
income determination in accordance with 24 CFR § 5.609(b) and any Federal Register
notice on mandatory exclusions issued by HUD, the PHA/MFH Owner is not required to:
Verify the income using third-party verification;
Document in the tenant file as to why the third-party verification was not available as
required by 24 CFR §§ 5.659(d), 960.259(c)(i), and 24 CFR 982.516(a)(2); 891.105;
891.410(b)-(c) and (g); 891.610(b)-(c) and (g); or
Report the income on forms HUD–50058/HUD–50059.
PHAs/MFH Owners may accept an applicant or participant’s self-certification as
verification of excluded income. The PHA/MFH Owner’s application and reexamination
questionnaire documentation may serve as the self-certification of excluded income.
PHAs/MFH Owners have the option of verifying the income using third-party
verification, if necessary, to determine if a source of income qualifies for exclusion.
Examples of excluded income categories that are verifiable through applicant or
participant self-certification include:
Supplemental Nutrition Assistance Program (SNAP) benefits, formerly known as
food stamps.
Income of a live-in aide. For a complete list of income exclusions, see 24 CFR
§ 5.609(b).
An income source that is partially excluded, for example, earnings in excess of $480 for
full-time students 18 years of age or older (24 CFR § 5.609(b)(14)), must be third-party
verified and reported on forms HUD–50058/HUD–50059.
J.8 Zero Income Procedures
PHAs/MFH Owners may accept a self-certification of zero income from the family at
admission and at reexamination without taking any additional steps to verify zero
reported income. HUD does not require that such self-certification be notarized.
PHAs/MFH Owners are reminded that they must verify families’ income in EIV within
120 days after admission, except where the PHA/MFH Owner used Safe Harbor
documentation to verify a family’s income.
PHAs/MFH Owners have discretion to establish reasonable procedures to manage the
risk of unreported income, such as asking families to complete a zero income worksheet
at admission or periodically after admission to determine if they have any sources of
unreported income, or searching an upfront income verification source (see Level 5) for
unreported income, such as a public benefits database to which the PHA/MFH Owner has
126
access. These procedures are meant to avoid improper payments and the need for
repayment agreements.
In calculating annual income from a zero income worksheet, PHAs/MFH Owners must
not assign monetary value to non-monetary in-kind donations from a food bank or similar
organization received by the family (24 CFR § 5.609(b)(24)(vi)). PHAs/MFH Owners
perform an interim reexamination only due to an increase in the family’s adjusted income
(24 CFR §§ 5.657(c)(3); 882.515(b)(3); 891.410(g)(2); 891.610(g)(2); 960.257(b)(3); and
982.516(c)(3)).
PHAs/MFH Owners that establish zero income procedures must update their local
discretionary policies, procedures, and forms to comply with the final rule requirements.
For example, families who begin receiving income which does not trigger an interim
reexamination should no longer be considered zero income even though the family’s
income is not reflected on the form HUD–50058/HUD–50059.
APPENDIX: SAMPLE NET FAMILY ASSET SELF-CERTIFICATION FORM
Self-Certification of Net Family Assets and Real Property
This form will help determine your eligibility for the program under the asset limitation. Your
housing provider may also use this form to help determine your income from assets if your total
net family assets do not exceed $50,000 (adjusted annually for inflation). Third-party verification
is required when net family assets exceed $50,000, and every three years.
Real Property (for example: land, house, condominium, commercial building, etc.).
1. Do you or any member of your assisted family have an ownership interest in any real
property?
☐ Yes ☐ No
If the answer to question #1 is No, skip to question #6.
2. If yes, please check off if any of the following statements are true about the property:
____ The property does not meet the disability-related needs for all members of the
family (for example, physical accessibility requirements, accessible common areas,
disability-related need for additional bedrooms, or closeness to accessible
transportation/medical facilities/other supportive services, etc.);
____ The property is not sufficient for the size of the family;
____ The property is located in an area that is a hardship (for instance, far from a family
member’s place of work or school);
____ The property is not safe to live in because of physical condition; or
____ The property is not a property where a family can live based on the State or local
laws where the property is located.
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If you checked off any of the above statements, you will need to provide additional
documentation to demonstrate that the statement is true.
3. If you did not check off any of the statements in question 2, do you or any member of your
assisted family have the legal authority to sell the property?
☐ Yes ☐ No
4. There is an exemption from the limitation on assistance for families that have an
ownership interest in real property for victims of domestic violence, dating violence, sexual
assault, and stalking. If you or any member of the assisted family is a victim, you can claim
this exemption from the real property limitation. Please check this box if you think you may
be eligible for this exemption..
☐I believe I may be eligible for this exemption and I would like more information from the
PHA’s VAWA Coordinator or Executive Director, or the MFH property’s Owner/Agent. (If
you do not understand this exemption or how to exercise your rights, you can speak to these
individuals for more information.)
5. What is the estimated cash value of the property (market value minus mortgage/other loans
and costs to sell. Enter $0 if market value of property is less than outstanding debt (i.e.,
mortgage is upside down/underwater)?
$
Other Assets (for example: accounts, luxury items that are not necessary)
6. How much income do you expect your family to earn from your total family assets in the
next year? This includes interest, dividends, and other earnings, e.g., anything for which you
receive Form 1099 tax documents. Actual income (interest, dividends, etc.) from excluded
assets is included as income.
$
7. Do you or any member of your assisted family have other assets (including checking
accounts, savings accounts, certificates of deposits (CDs), stocks, bonds, luxury items,
recreational vehicles, etc.) that total more than $50,000 (adjusted annually for inflation)?
☐ Yes ☐ No
Assets to consider Assets always excluded
Retirement accounts (e.g., IRAs, 401k,
Checking and savings accounts 403b)
Stocks, bonds, mutual funds Educational savings accounts (Section
529, Section 530, Coverdell ESA, etc.)
128
Luxury items or items that are not ABLE accounts
necessary, e.g., recreational boat, vehicles
Non-revocable trusts
not used for regular transportation
Necessary items of personal property
Assets disposed of for less than fair
(items essential for the maintenance, use,
market value; for example, if you gave
and occupancy of a home or necessary for
away a house to someone out outside of
employment, education, cultural
the assisted family within the past two
expression, or health and wellness)
years, the value of the house would be
Federal tax refunds (must be subtracted
considered an asset (except as determined
from total net family assets)
by certain divorce or separation
settlements)
I/We, the undersigned, certify that the information provided here is true and correct to the best of
my knowledge and recollection. Anyone who knowingly submits a false claim or knowingly
makes a false statement is subject to criminal and/or civil penalties, including confinement for up
to 5 years, fines, and civil and administrative penalties. (18 U.S.C. 287, 1001, 1010, 1012; 31
U.S.C. 3279, 3802)
Head of Household Signature Date
129
Source: Legislative text reproduced verbatim
Plain English
PIH Notice § 2023-27 (H 2023-10) implements Sections 102 and 104 of the Housing Opportunity Through Modernization Act of 2016 (HOTMA), which overhaul income calculation, asset limits, and reexamination procedures for Public Housing, Housing Choice Voucher, and several Multifamily Housing programs. Section 102 revises how annual and interim income reviews are conducted, while Section 104 establishes a $100,000 net-asset ceiling (adjusted for inflation) and a real-property ownership restriction for program eligibility. The notice also modernizes documentation requirements to reduce burden on families accessing rental assistance, in alignment with OMB Memo M-22-10.
Written by anthropic/claude-sonnet-4.6 · Reviewed on October 7, 2026
Plain English — not legal advice.
For Property Managers
Under PIH Notice § 2023-27, operators of covered programs—including Section 8 PBRA, HCV, and Public Housing—update Tenant Selection Plans and EIV policies to reflect HOTMA's new income-calculation rules, asset limits, and reexamination timelines. Compliant MFH Owners provide tenants at least 60 days' notice before modifying leases and use revised HUD Model Leases once their software meets TRACS 203A requirements. Full compliance is mandatory by January 1, 2027, after which HOTMA-related findings may be issued during Management and Occupancy Reviews.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
For Tenants
PIH Notice § 2023-27 affects how housing providers calculate your income and assess your assets at admission and reexamination; notably, applicants with net family assets above $100,000 (inflation-adjusted) or disqualifying real property may be denied assistance. Tenants who believe an income or asset determination is incorrect may raise the issue during their reexamination, request a hardship exemption where applicable, or contact a local tenant-rights organization for guidance. Complaints about MFH Owner compliance can be directed to HUD at MFH_HOTMA@hud.gov.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated October 7, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
Effective Timeline
Current
Oct 6, 2026
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