Article | HUD and the IRS Adapt Income Rules for VASH Voucher Holders

The IRS has issued a new Revenue Procedure 2024-38 that answers questions relating to income determinations and LIHTC and tax-exempt bond properties with veterans benefiting from HUD-VASH vouchers.

Background

The Revenue Procedure is a response to a Notice published by HUD in the Federal Register on August 13, 2024, “Section 8 Housing Choice Vouchers: Revised Implementation of the HUD-Veterans Affairs Supportive Housing Program” (HUD–VASH Notice). This Notice sets forth the policies and procedures to administer tenant-based and project-based Section 8 Housing Choice Voucher rental assistance under the HUD-VASH program. The HUD-VASH program combines HUD’s Housing Choice rental assistance with case management and clinical services provided by the Department of Veterans Affairs (VA) to assist veterans experiencing homelessness. That program is administered by local public housing agencies (PHAs) that have partnered with local VA medical facilities or other entities designated by the VA. Among other guidance, the HUD–VASH Notice provides new requirements for determining the income eligibility of HUD–VASH applicants who receive VA service-connected disability benefits. In particular, the Notice seeks to ensure disabled veterans’ opportunity to reside in HUD–VASH project-based-voucher housing, located either on the site of a VA facility or where HUD–VASH supportive services are provided on-site at the housing. To achieve these goals, HUD is establishing new requirements for determining income for eligibility for HUD–VASH. Specifically, for HUD–VASH applicants receiving VA service-connected disability benefits, HUD is waiving the  usual rule that annual income includes all amounts not specifically excluded in 24 CFR 5.609(b). As an alternative requirement, the PHA must determine the HUD–VASH applicant’s annual income by excluding all VA service-connected disability benefits received by the applicant and also the usual HUD income exclusions. 

Bond and LIHTC Income Determinations

For tax-exempt bond properties, the income of individuals and area median gross income are determined by the Secretary of the Treasury or her delegate in a manner consistent with determinations under section 8 of the United States Housing Act of 1937 as laid out in 24 CFR 5.609 [IRC §142(d)(2)(B)(i)]. Section 42 also draws on this bond provision for LIHTC housing [IRC §42(g), IRC§42(i)(3)]. This revenue procedure provides the same exclusion as HUD for purposes of bond and LIHTC properties. This exclusion mirrors the HUD–VASH income eligibility waiver.

This revenue procedure applies for determining the income of prospective and current tenants who, as of the date of the income determination, are approved to receive or are currently receiving assistance under the HUD–VASH program and to whom the HUD–VASH income eligibility waiver applies (In-scope Tenants). For initial and continuing bond and LIHTC income determinations, all VA service-connected disability benefits are excluded from income for In-scope Tenants. This applies to income determinations for this revenue procedure may be applied to income determinations on or after October 24, 2024. 

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