Frequently Asked Questions
The tax credit program, also known as the “federal low-income housing tax credit program” or simply LIHTC, is a popular, affordable housing program that has been around since 1987. Unlike most housing programs that are administered by the U.S Department of Housing and Urban Development (HUD), the tax credit program is administered by the IRS in coordination with state housing finance agencies across the country. Landlords who participate in the program get to claim tax credits for 10 years for their tax credit properties in return for renting at least some of their apartments to low-income tenants at a restricted rent.
No. The tax credit program gets its name because owners of participating properties receive valuable tax credits in return for keeping their buildings affordable. As a tenant in a tax credit property, the benefit you receive comes in the form of restricted rent, assuming you’re income-eligible.
If you have a retirement or other annuity, there’s a good chance it will need to be counted in some way as part of your household income. How a landlord should determine how to treat an annuity that you have (or that you may set up after you sign a lease for a low-income apartment at a tax credit property) depends on whether you have the right to withdraw the balance of the annuity and if you are already receiving payments.
If you’ve already begun getting payments, the landlord will need to ask your broker whether you have the right to withdraw the balance of the annuity. If you do have this right, then the landlord must treat your annuity as an asset.
Also, once you’ve begun receiving annuity payments, you normally can’t convert it to a lump sum of cash. If that’s your situation, then your regular payments will be treated as income by your landlord.
Expect that your landlord will need to verify whether you have the right to withdraw the balance (even if penalties are assessed), what the basis is on which the annuity may be expected to grow in the upcoming year, any surrender or early withdrawal penalty fee, and the tax rate and tax penalty that would apply if you were to withdraw the entire balance of your annuity.
Trusts are often counted in some way as part of household income. How a landlord should determine how to treat a trust that you have (or that you may set up after you sign a lease for a low-income apartment at a tax credit property) depends on whether you have access to the principal in the account or the income from the account.
No. Assets themselves aren’t counted as income. However, any income that an asset produces is customarily counted when determining the income-eligibility of a household.
Yes. If you’re considering applying for a low-income apartment at a tax credit property, expect that the landlord or property manager will need verification of income and assets. The tax credit program requires an explicit confirmation, given how much is at stake.
The rent is calculated based on the number of bedrooms in the apartment, and not the actual number of people who live there. Your landlord must calculate your rent assuming that 1.5 occupants live in each bedroom (or one occupant, in the case of a studio).
So, the rent for a two-bedroom apartment, for example, would be based on three occupants (1.5 x 2 bedrooms) in the apartment.
The tax credit rent also includes a utility allowance.
The maximum rent you can be required to pay for a low-income unit in a tax credit property is 30 percent of a percentage (usually 50 or 60 percent) of area median gross income (AMGI).
Yes. The number of people in your household affects whether you can qualify for a low-income unit at a tax credit property. Your household must earn less than a certain percentage of AMGI, which is based on household size. On the other hand, the tax credit rent is not based on the actual number of people in your apartment.
No. The tax credit program doesn’t require landlords to have tenants sign a special lease. But you may find a lease addendum with one or two clauses specific to the tax credit program. For example, you can probably expect a clause requiring you to cooperate with your landlord in recertifying and verifying your income each year, and there may be language saying that if your landlord learns that you knowingly gave false or incomplete income information when determining eligibility, this could be grounds for terminating your lease.
When you first sign the lease for an apartment at a tax credit property, it must be for a term of at least six months (although there are a couple of exceptions). Most leases are for twelve month’s.
There may be. Many tax credit properties include some low-income apartments and some market-rate apartments.
You shouldn’t. Landlords are required not to segregate market-rate and low-income apartments, and no one at your tax credit property should know how much rent you pay unless you tell them.
No. It’s determined by looking forward and “annualizing” your income for the next year. For example, if you earn $3,000 a month at a job, this income will be counted as $36,000 (12 months x $3,000), even if it turns out you get a raise or even lose your job a month after moving into your apartment.
Employment income must be included as part of household income, whether the income is steady or irregular.
Normally, landlords who participate in the tax credit program must use a tenant’s current circumstances to “annualize” the income, which means include an amount that the tenant expects to earn over the next 12 months, even if it turns out that number is much higher or lower.
No. A prospective tenant isn’t disqualified simply for having a divorce settlement or joint assets.
While it’s possible that your income situation following divorce would make you ineligible, having a divorce settlement or joint assets aren’t valid reasons to refuse to process a tax credit applicant’s application or automatically consider the applicant not to be income-eligible.
No. Unlike other housing programs, tax credit rent is based on the average income in your county or other local areas. This average is known as the AMGI, which HUD updates each year. Your actual income matters when it comes to determining if you qualify for a low-income apartment at a tax credit property. But the actual rent you pay is not based on your income.
Not necessarily. Although every tax credit property must follow the same rules to determine income eligibility, you may earn too much for one tax credit property but still be considered eligible for others. This can happen if, for example, you earn 55 percent of the income limit. A property that must rent to tenants earning no more than 50 percent of the income limits would reject you, but properties using the 60 percent figure would find you eligible. Also, income limits vary by county, so if you earn slightly too much income for one property, you may have success at another property that uses different limits.
You shouldn’t have to worry about getting evicted for going over income. If your income rises to as high as 140 percent of AMGI, there’s no problem. If your income rises above that level, it may require the landlord to take steps to make sure the building stays qualified for all its tax credits.
In the worst case, your landlord may (with proper notice) switch your apartment to market-rate, and you would lose the benefit of your restricted rent. However, if your income is that high, you’re not low income and you should be able to afford the market-rate rent. Landlords at tax credit properties can only evict tenants for “good cause” as defined by state or local laws. This also means your landlord can’t decide to not renew your lease without good cause.
Fortunately, no. The tax credit program doesn’t have “interim recertifications,” which means if you switch jobs, get a raise, or buy or sell an asset, you don’t need to get your income calculated and verified again. You should expect to meet with management to recertify your income just once a year, usually around the anniversary of your lease signing.
The general rule is that if everyone in your household is a full-time student, then you can’t rent at a tax credit property. So if you’re a full-time student with a roommate who goes to school part-time, then you’re fine. If everyone in your household goes to school on a full-time basis, ask management whether you fall into an exception.
Yes. Tax credit properties are subject to the same fair housing laws as conventional properties. Plus, thanks to an agreement between HUD, the Treasury Department, and the Justice Department (DOJ), the IRS can easily learn about a landlord’s fair housing violation and use it as grounds for tax credit noncompliance. This means landlords at tax credit properties have even more reason not to discriminate against you.
Tenants and prospects often have questions about the income and rules for tax credit properties. In addition to the answers to frequently asked questions answered here, you can get state-specific questions answered by the state housing finance agency that administers the tax credit program where you live.
Your first step in applying is to complete an application. You can download an application HERE or call 715-394-6601 to have one mailed or emailed to you.
Once you have completed the application return it to the SHA office located at 1219 North 8th St., Superior, WI or fax to 715-394-3512 or email to info@superiorhousing.org
It is very important to keep your information up to date with SHA. Incorrect information may affect your placement on the waitlist and cause delays.
Also, SHA will periodically update the waitlist to determine that you are still interested. We will send an update letter, usually annually, that must be returned indicating your interest in remaining on the waitlist. If you do not return the letter, or if it is returned by the post office as undeliverable, your name may be removed from the waitlist. You will have 10 days from the date your name was removed to appeal the determination, in writing. If you do not appeal within 10 days you will need to reapply.
All changes to your original application must be made in writing. Please send or deliver the new information to the SHA office located at 1219 North 8th St., Superior, WI or fax to 715-394-3512 or email to info@superiorhousing.org.
Once SHA receives the application, your name will be placed on the waitlist(s) you chose. The lists are sorted by the date and time SHA received the application and any applicable preferences.
When your name comes to the top of the list, SHA will send you an appointment letter to come in for an intake interview. At this interview, SHA will verify the information you reported on your application in order to determine your eligibility for the programs. This information includes income, assets, deductions and identity, as well as a background check.
Both HCV and Public Housing screen for criminal history although the programs have different criteria. The specifics of the background checks, as well as any appeal options, will be discussed at the intake appointment. HUD has five (5) mandatory denials.
- Life-time registered Sex Offender
- Manufacturing Methamphetamine on federally subsidized property
- Owing money to a housing authority
- Current drug user (SHA defines this as anyone who has a drug charge within the last year)
- Having been evicted for drugs from federally subsidized property in the last 3 years
Public Housing will also screen for Tenant Suitability
- SHA will request 2 years of good rental references
- If you have insufficient rental references SHA may ask for credit references or run a credit report
The Housing Choice Voucher Program (HCV) does not screen for tenant suitability, however we do encourage the private owners that partner with this program to do their own screening, as they would do for any other tenant.
If you need an accommodation due to a disability, please indicate that on your application or call the office. SHA will attempt to accommodate any request that is reasonable and within the scope of our programs.
- Your information will be compiled and your income calculated.
- SHA will determine your voucher bedroom size based on the following:The Superior Housing Authority will issue a housing choice voucher for a particular bedroom size – the bedroom size is a factor in determining the family’s level of assistance. The following guidelines will determine each family’s unit size without overcrowding or over-housing:
Number of Bedrooms Number of Persons Minimum Maximum 0 1 1 1 1 2 2 2 4 3 3 6 4 4 8 5 5 10 - You will be required to attend a briefing appointment. At this appointment, SHA staff will explain the program rules and regulations, issue you a voucher and give you the paperwork the owner needs to complete.
- You will then search for a unit on the private market that is within your max amount using the payment standards. This calculation will be explained at the briefing.
- Once you find a unit, you and the Owner will complete the paperwork that was given to you at the briefing.
- Return the paperwork to SHA and staff will determine if the unit is affordable and whether or not the rent is reasonable.
- SHA will then schedule the unit for an inspection.
A voucher is valid for 60 days.
If you are unable to locate a suitable unit in that time, you may request a 30 day extension.
Depending on the circumstances, SHA may or may not grant the extension, so we recommend you start looking as soon as possible.
On the HCV program, you are responsible for locating a unit that is acceptable to you and affordable.
You can research listings in the newspaper or listed online.
SHA may also have a current listing of available units in the office.
Yes, SHA will schedule an initial Housing Quality Standards (HQS) inspection with the owner.
HQS is a limited inspection that will identify any items that pose a health or safety risk.
You will find a sample of common inspection criteria HERE
If any items fail the inspection the owner will be given time to complete the repairs.
On the HCV program, a participant will pay anywhere from 30-40% of their monthly income towards rent and SHA will pay the difference up to a certain amount. These specific amounts use your adjusted annual income, voucher bedroom size and the payment standards to come up with the max amount you can afford for rent. These calculations will be explained at your briefing appointment.
No, this would be deemed unaffordable. Sometimes an owner is willing to reduce the rent to allow you to rent that unit, otherwise you would need to keep looking.
You will pay the owner your portion of the rent and SHA will pay the owner the Housing Assistance Payment (HAP) on the first of each month.
SHA does not have funding to assist with deposits. You can find other community resources on our Community Partner page HERE
Depending on the unit you chose, you may or may not need to pay utilities. SHA provides a utility allowance for those that pay utilities at your briefing appointment.
The Utility Allowance will reduce your rent amount. Your Housing Specialist will explain this calculation at your move-in orientation.
You will be required to attend an annual recertification appointment to re-determine your income.
SHA also understands that circumstance can change throughout the year. Please report all changes to your household size, income and/or deductions, to your Housing
Specialist, in writing, within 10 days of the change. The Housing Specialist will determine if the change will affect your rent portion.
You will have an annual HQS inspection of your unit.
If you have any repair issues that you have reported to the owner, but they have not made the repairs, you can request a special inspection from SHA.
Your Housing Specialist is your best resource in getting your questions answered. They will be happy to assist you with any questions that come up in the future.
- Your information will be compiled and your income calculated.
- SHA will determine what size unit you are eligible for based on:
Number of Bedrooms Number of Persons Minimum Maximum 0 1 1 1 1 2 2 2 4 3 3 6 4 4 8 5 5 10 - You will be offered the next available unit that meets the needs of your family size and any accessibility features needed.
You are allowed to decline the offer, for good cause, and remain on the list until the next unit becomes available.
If you decline the offer without good cause your name will be removed from the waitlist and if you are still interested in Public Housing you would need to reapply.
Your Housing Specialist will set up a move-in date and schedule you an appointment to come in and sign the lease.
At this appointment, the Housing Specialist will explain the Lease, Resident Handbook and other rules and regulations that govern Public Housing.
Yes, SHA requires a $150.00 deposit at the time of move-in. If you are unable to pay this in full at the time of move-in, talk to your Housing Specialist and they may be able to make a payment arrangement.
On the Public Housing program, a tenant will pay 30% of their monthly income towards rent.
SHA uses your adjusted income to determine your rent amount. Your Housing Specialist will review this calculation with you at your move-in orientation appointment.
Your first months rent is due at move-in and the first of the month every month after that.
You can by check or money order at Superior Savings Bank at 1130 Tower Ave, Superior, WI (bring your rent statement to the bank with you) or you can drop it in the rent drop box out front of SHA offices at 1219 N Eighth St., Superior, WI.
SHA does not accept cash payments.
Depending on the site, you may or may not need to pay utilities. SHA provides a utility allowance for those that pay utilities.
The Utility Allowance will reduce your rent amount. Your Housing Specialist will explain this calculation at your move-in orientation.
- You will be required to attend an annual recertification appointment to redetermine your income.
- SHA also understands that circumstance can change throughout the year. Please report all changes to your household size, income and/or deductions, to your Housing Specialist, in writing, within 10 days of the change. The Housing Specialist will determine if the change will affect your rent portion.
- You may have one or more required inspections throughout the year. SHA will give you advanced notice of these inspections.
SHA does allow pets, with restrictions. Please see SHA’s Pet Policy HERE
In order for someone to move in with you, they must be added to your Lease. The first step would be to contact your housing specialist, in writing to make the request.
The person must go through the same eligibility screen as an applicant.
SHA cannot add people to the Lease if it will cause over-crowding.
You must report the birth, adoption or court awarded custody of any minor children within 10 days of the change, in writing, to your Housing Specialist.
SHA’s Public Housing is in the City of Superior only. If you would like to move, you must give proper notice per your Lease.
Contact your Housing Specialist and they will help you through that process.
Your Housing Specialist is your best resource in getting your questions answered. They will be happy to assist you with any questions that come up in the future.