Handling of Assets – 2% imputed income from assets when assets exceed $5,000

Written by Harold Tucker, Spectrum Enterprises

In my travels this year I have come across a few times were managers and owners are not using the 2% passbook rate approved by HUD to calculated income from assets. In some instances a 1% value was being used to calculate income from assets that exceed $5,000. I found this intriguing and asked why they were using the 1% and not the 2% Passbook Rate set by HUD. The answer I received was that the local housing authority had called and told them to use 1% value to calculate income from assets. The confusion here is that the housing authorities when calculating income for section 8 subsidy will often use a percentage acquired from a local bank, which may be lower that 2%. However, it is important to remember that the Passbook Rate is established by HUD and is part of the 4350.3 Handbook. Until HUD in Washington D.C. changes the Passbook Rate all tax credit properties should be calculating income from assets, greater than $5,000, with a 2% imputed income from assets.
Below is the excerpt from the HUD 4350.3 Occupancy Handbook Section 1: Determining Annual Income which explains how to calculate income from assets that exceed $5,000.

F. Calculating Income from Assets When Assets Exceed $5,000

  1. When net family assets are more than $5,000, annual income includes the greater of the following:
    1. Actual income from assets; or
    2. A percentage of the value of family assets based upon the current passbook savings rate as established by HUD. This is called imputed income from assets. The passbook rate is currently set at 2%.
  2. To begin this calculation, first add the cash value of all assets. Multiply the total cash value of all assets by .02. The product is the “imputed income” from assets. Then, add the actual income from all assets. The greater of the imputed income from assets or the actual income from assets is included in the calculation of annual income.


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