Question from a Blog Reader

"I know this is probably a dumb question, but we have an applicant who receives military retirement income. Their Retiree Account Statement shows that a significant amount of their income (essentially half) goes to an ex-spouse through a former spouse deduction. Do I count income for the applicant before or after the deduction? I was figuring the gross amount would be used, but if it is, the household is over-income, so I want to be certain.

Answer

This is not a dumb question but rather shows reasonable due diligence as you process the file. The knee-jerk reaction to simply count all of the income could result in excluding a person who qualifies. It also could end in miscalculating rent if you are also determining rental subsidy payments. This situation also demonstrates the fallacy of the often-heard statement "Always count gross income." There are many times when the rules are more nuanced and counting income after adjustments is the correct approach. Let's see if that apples in this case.

The HUD Multifamily Handbook, under the heading Federal Government/Uniformed Services Pensions, says: "In instances where the applicant/tenant is a retired Federal Government / Uniformed Services employee receiving a pension that is determined by a state court in a divorce, annulment of marriage, or legal separation proceeding to be a marital asset and the court provides OPM with the appropriate instructions to authorize OPM to provide payment of a portion of the retiree’s pension to a former spouse, that portion to be paid directly to the former spouse is not counted as income for the applicant/tenant." HUD 4350.3 5-7(4) 

We believe that this fits the situation described and the amounts paid from the benefits to the former spouse are not counted. It is important to note that similar provisions apply to SS and private pensions. See also HUD 4350.3 5-7(5).

Bonus | for a review of other times income must be adjusted, see the answer to this quiz HERE. Once you click the link to the answers, scroll down to Net Income (5/26/2021).

 Don't Miss Our Only In-Person LIHTC Comprehensive Course This Year! [with optional online HCCP] 

"Why", you ask?

• Discuss advanced LIHTC issues and the many, many changes to the program from the last few years and what is coming with HOTMA and other pending changes!
• Prepare for the optional HCCP Exam, the biggest step in getting the premier LIHTC designation recognized by investors and employers throughout the industry!
• Sponsored by SDHDA, but good for all LIHTC professionals!

Click on the art below for more information and to register!