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August 8, 2012

Mandy asks…

Do tax credit apartments have to comply with HUD manual 4350?

Along with the IRS, HUD is responsible for administering the tax credit program for apartment building owners. I notice that a number of owners are not complying with the provisions for exclusions from income which number about 16. For example, HUD‘s manual dictates an owner must use “current” income to “anticipate” income for the next 12 months. But if an employer says your current income is $20.00 per hour the HUD apparently allows the owner to add in previous overtime etc. which of course would not be your “current” income. Yet HUD states that “temporary, nonrecurring, or sporadic income is not counted” as income so I conclude the overtime, etc. would be excluded. But many owners are improperly including it to the detriment of applicants. The HUD manual also states that if changes are expected to occur to lower the income during the year then that information must be used to determine “anticipated” income i.e. the employer says overtime is not anticipated then overtime must be subtracted from the anticipated income. The HUD manual can be viewed on the internet. Are HUD and the IRS not enforcing their own provisions regarding income that must be excluded? http://www.hud.gov/offices/adm/hudclips/handbooks/hsgh/4350.3/
http://www.tsahousing.com/

Administrator answers:

HUD has the local HA manage the programs.

Overtime is usually actually counted, as people tend to work the same hours, year after year. A one time thing would not make a significant difference, as it is averaged for an entire year. They do this to accommodate people who work seasonally, very common in CA. Additionally there are people who work 40 hour weeks most of the year, but 60 hours during the holidays.

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