HOTMA: Section 104: Asset Limits
The Final Rule of the Housing Opportunity Through Modernization Act of 2016 (HOTMA) provides some significant changes to the way managers and owners will verify and treat assets. These changes will benefit tenants, administrators and housing agencies. The goal is to help streamline and reduce administrative burdens.
I am going to address two changes that will be implemented on 1/1/2024 with regards to how some assets may be verified in the Low-Income Housing Tax Credit (LIHTC) program. Before implementing these changes, please be sure to check with your housing agency to see if they are following and implementing these changes.
#1: HIGHER THRESHOLD FOR IMPUTING ASSET INCOME:
HOTMA has raised the imputed asset threshold from $5,000 to $50,000.
What does this mean? Tenants may self-certify their assets when combined net family assets are $50,000 or less.
How is this done? Tenants will complete a declaration or certification recording their total net assets and the “actual” amount of income the family will receive from the assets. I anticipate Spectrum will post an Under $50K Asset Certification in late 2023 or early 2024.
#2: EXCLUSION OF RETIREMENT AND EDUCATIONAL SAVINGS ACCOUNTS:
HOTMA will not consider retirement accounts and educational saving accounts net family assets. However, any distributions of periodic payments received by the family are still considered income.
You may exclude any retirement plan recognized by the IRS. This includes IRAs, employer retirement plans (401K), KEOGHs for self-employed individuals, etc.
These two changes alone should help reduce the paperwork for households and administrators. Stay tuned for more information on asset income calculations.
-Harold Tucker – Director of State Compliance
