HOTMA | Sorting the THREE New $50,000 Asset Rules | Part 1

Series Outline

$50,000 as it relates to...

1. Asset Verification

2. Non-Necessary Personal Property

3. Imputing Asset Income

HOTMA has three rules relating to $50,000 and assets that can be easy to mix up. In this series, we deal with each of the three and help untangle any confusion. 

HOTMA $50,000 Asset Rule #1 | $50,000 Self-certification. At 24 CFR 5.618(b), the HOTMA Rule says that "a PHA or owner may determine the net assets of a family based on a certification by the family that the net family assets (as defined in § 5.603) do not exceed $50,000, which amount will be adjusted annually in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers, without taking additional steps to verify the accuracy of the declaration. The declaration must state the amount of income the family expects to receive from such assets; this amount must be included in the family's income." § 5.659 further clarifies, however, that the owner must obtain third-party verification of all family assets every 3 years." The HOTMA Implementation Notice clarified that self-certification is acceptable even at move-in, as long as assets are third-party verified another year to meet the every 3-year requirement. [HOTMA Implementation Notice F.7.] 

When keeping the three $50,000 asset rules straight, it is important to remember that this rule relates to a household's total net assets. For the second HOMTA $50,000 asset rule, we will note a distinction in that it does not relate to total assets. Check the next article to understand this difference when it comes to non-necessary personal property. 

Does this apply to the LIHTC? | There is no formal written guidance, and it is unclear if the IRS has the time or the interest to issue any. The feedback we received was that the new HUD guidance automatically made the old IRS guidance obsolete (or at least updated it), as laid out in the 8823 Guide when underlying HUD regulations change. Several state agencies clients that we trust have reported similar conversations with the IRS with the same result being agreed by all. Further food for thought as to the conclusion that the new standard applies to the LIHTC: Rev. Proc. 94-65 directly cited the HUD asset regulation when it established the $5,000 asset self-certification rule. The only asset rule that related to $5,000 at that time was the imputed asset income rule. The discussion then was that imputed asset income was not required, increasing the IRS' comfort with self-certification, as that extra imputing step was not necessary. Now that the imputed threshold has increased to $50,000, some have concluded (with or without discussions with the IRS) that the fact pattern supports raising the threshold. Others are going to wait for IRS guidance to change the policy if such ever comes. We will see ultimately what happens.

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