Can Households Drop Section 8 Subsidy to Benefit from Lower Tax Credit Rents?
Question from a Blog Reader
"We have a Section 8 property with tax credits. We know that we can collect rent in excess of the tax credit max rents as long as a household is benefiting from rental assistance. We know this is true until subsidy ends, when the tenant rent will have to go down to the tax credit max rent. What happens if the household is to the point where they are getting rental assistance, but their portion of the rent is actually more than it would be if they were under the tax credit limits. Our owner does not want to give them a choice to go off subsidy when this happens. Can we have a policy to not give them an option of the lower tax credit rents until they lose subsidy, as long as we apply it to all households consistently?"
Summary: We do not believe that HUD guidance allows the owner to choose, rather the household must be given the option and decide what is in their own best interest.
The 4350.3 5-30 (B) says that usually applying the program with the lowest rent is in the best interest of the residents. However, at the recertification of a Section 8 family in a property with Tax Credits, "if the family’s income has increased since move-in to a point that the assisted rent exceeds the Low Income Housing Tax Credit rent, that family will have to make a choice between the lower tax credit rent and the security of continuing on the rental assistance program." [underlined emphasis ours] Households cannot exercise their right to this choice if they are not informed.