Affordable housing finance
Gross rent floor
An IRC § 42 election fixing a unit's minimum rent ceiling at its allocation-date (or placed-in-service) level, so a falling AMI can't force rents down.
Definition
Rent ceilings track AMI, and AMI can fall. The gross rent floor — rooted in IRC § 42(g)(2) and administered under IRS Revenue Procedure 94-57 — fixes a unit's minimum ceiling at the level in effect when credits were allocated, or, at the owner's election, when the building is placed in service. If HUD's published limits later drop below that floor, the project may keep charging floor-level rents without violating the gross-rent limit.
Why it matters in an underwrite
HUD's hold-harmless policies make actual rent rollbacks rare, but the floor is the legal backstop that lets an underwrite treat in-place restricted rents as a minimum rather than a variable. The election has to be made correctly and early: document which date the floor keys off at allocation and Form 8609 time, because in a county that later posts an AMI decline, the difference between an allocation-date floor and a placed-in-service floor is permanent rent basis.
Sources & related guides
See also
See the term in the law itself
Read the controlling text in the Code Library, or ask the AI how it applies to your project.
Last reviewed 2026-07-29. General information, not legal advice.