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C. Households and Family Size

IRS Publication 5913 — Low-Income Housing Credit: Guide for Completing Form 8823 (Jan. 2024) · 2026 edition · updated 2026-07-29 · United States

  • (1) As a general rule, a “household” consists of all individuals (or tenants) residing in a unit. To determine the household income limit, all applicable income standards are adjusted for family size. For LIHC purposes, all occupants of a unit are considered in the determination of family size except the following (refer to HUD Handbook 4350.3 for complete discussion):[10]

    • Live-in aides. A person who resides with one or more elderly persons, near-elderly persons, or persons with disabilities, and who is determined

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to be essential to the care and well-being of the person(s); is not obligated for the support of the person(s); and would not be living in the unit except to provide the necessary supportive services. While a relative may be considered to be a live-in aide/attendant, they must meet the above requirements. The income of live-in aides is not included in the household’s income.

  • Foster children and foster adults. Foster children are in the legal guardianship or custody of a State, county, or private adoption or foster care agency, yet are cared for by foster parents in their own homes under some kind of foster care arrangement with the custodial agency. A foster adult is usually an adult with a disability who is unrelated to the tenant family and who is unable to live alone.

  • Guests. A visitor temporarily staying in the unit with the consent of the tenant or another member of the household who has expressed or implied authority to consent on behalf of the tenant.

  • (2) When determining family size for income limits, the owner must include the following individuals who are not living in the unit:

    • Children temporarily absent due to placement in a foster home.

    • Children in joint custody arrangements who are present in the household 50% or more of the time. If disputed, determine which parent claimed the children as dependents for purposes of filing a federal income tax return.

    • Children who are away at school but who live with the family during school recesses.

    • Unborn children of pregnant women (as self-certified by the woman).

    • Children who are in the process of being adopted.

    • Temporarily absent family members who are still considered family members if approved to live in the unit. For example, the owner may consider a family member who is working in another state on assignment to be temporarily absent.

    • Family members in the hospital, or a rehabilitation facility, for periods of limited or fixed duration are considered a family member. These persons are temporarily absent; and

    • Persons permanently confined to a hospital or nursing home. The family decides if such persons are included when determining family size for income limits. If the family chooses to include the permanently confined person as a member of the household, the owner must include income received by the confined person in calculating family income.

  • (3) Changes in the size of an existing household after the initial tenant income certification must also be addressed.

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▸ Contents — IRS Publication 5913 — Low-Income Housing Credit: Guide for Completing Form 8823 (Jan. 2024)
IRS Publication 5913 — Low-Income Housing Credit: Guide for Completing Form 8823 (Jan. 2024)
  1. Low-Income Housing Credit Agencies Report of Noncompliance or …
  2. Audit Technique Guide Revision Date: 1/24/2024
  3. Table of Contents
  4. A. Background / History
  5. A.1. IRS Analysis of Forms 8823 Submitted by State Agencies
  6. B. Authority of Guide
  7. C. Purpose of Guide
  8. D. Content of Guide
  9. D.1. Organization of Chapters
  10. E. Relevant Terms
  11. G. Exhibit 1-1 Reports of Noncompliance (For 8823) Process Map…
  12. H. Exhibit 1-2 Form 8823
  13. I. Exhibit 1-3 IRS Noncompliance Notification Letter, Letter 3…
  14. A. Overview
  15. A.1. After Building is Approved
  16. A.2. Before Building is Approved
  17. A.3. Correction Period
  18. B. General Guidelines for Completing Form 8823
  19. C.1. Line 1
  20. C.2. Line 2
  21. C.3. Line 3
  22. C.4. Line 4
  23. C.5. Line 5
  24. C.6. Line 6
  25. C.7. Line 7
  26. C.8. Line 8
  27. C.9. Line 9
  28. C.10. Line 10
  29. C.11. Line 11a-p
  30. C.12. Line 11q
  31. C.13. Line 12
  32. C.14. Line 13
  33. C.15. Line 14
  34. C.16. Signature
  35. A. Overview
  36. B.1. Initial Physical Inspection and Tenant File Review
  37. B.2. Subsequent Physical Inspections and Tenant File Reviews
  38. B.3. Reporting Current Noncompliance
  39. C. Sampling Requirements
  40. C.1. Selecting a Sample
  41. C.2. Interpreting the Results
  42. C.3. Expanding the Sample Size
  43. D. Determining the Scope of the State Agency’s Inspection / Re…
  44. E. Determining the Depth of the State Agency’s Inspection / Re…
  45. F. Consideration of Taxpayer Due Diligence
  46. G. Evidence
  47. G.1. Documentary Evidence
  48. G.2. Oral Testimony
  49. G.3. Third Party Evidence
  50. G.4. Evaluating Evidence
  51. H. Workpapers
  52. H.2. Availability of Workpapers to Owners
  53. A. Definition
  54. B.1. Years Prior to 2009
  55. B.2. Years Subsequent to 2008
  56. C. Households and Family Size
  57. D. Family Size Increases
  58. D.1. Mixed-Use Projects
  59. D.2. 100 Percent LIHC Projects
  60. D.3. Original Household No Longer Occupies Unit
  61. E. Family Size Decreases
  62. F. Verifying Income and Assets
  63. G. Determining Annual Income
  64. G.1. Employment Income
  65. (7) Example 4: Sporadic Employment
  66. G.2. Military Employment
  67. G.3. Military Basic Housing Allowance
  68. G.4. Deployment of Military Personnel to Active Duty
  69. G.5. Income from Training Programs
  70. G.6. Income from a Business
  71. G.8. Assets
  72. G.9. Income from Investments
  73. G.10. Contract Sales of Real Estate Assets
  74. G.11. Periodic Social Security Payments
  75. G.12. Periodic Payments, Retirement Accounts, Annuities, and T…
  76. G.13. Retirement Accounts
  77. G.14. Annuities
  78. G.15. Trusts
  79. G.16. Public Assistance
  80. G.17. Recurring Gifts, Grants, and Contributions
  81. G.18. Educational Scholarships or Grants
  82. G.19. Temporary, Nonrecurring, or Sporadic Income
  83. G.20. Alimony or Child Support
  84. G.21. Unearned Income or Minor Children
  85. G.22. Resident Services Stipend
  86. G.23. Items Excluded from Income (Miscellaneous)
  87. H. Tenant Income Certification Effective Date
  88. H.1. Signatures
  89. I. Tenant Moves to Another Low-Income Unit
  90. I.1. In the Same Building
  91. I.2. In a Different Building
  92. J.2. Testing for Purposes of Next Available Unit Rule
  93. J.3. Previously Income-Qualified Households
  94. L. Documentation Requirements
  95. L.1. Sufficient but Imperfect Documentation
  96. L.2. Use of Standardized Forms
  97. M. In Compliance
  98. N. Out of Compliance
  99. O. Back in Compliance
  100. O.1. Insufficient Documentation
  101. O.2. Income Ineligible Households
  102. O.3. Initial Tenant Income Certification is Late
  103. P. References
  104. Q. Exhibit 4-1: CCA 2009090416224806
  105. A. Definition
  106. A.1. Exception for Certain Buildings
  107. A.5. Mixed-Use Buildings
  108. B. In Compliance
  109. B.1. Household Vacates Unit
  110. B.2. Owner Takes Action to Remove Noncompliant Household
  111. C. Out of Compliance
  112. D. Back in Compliance
  113. E. References
  114. A. Definition
  115. A.1. Identifying Noncompliance – Certification Reports
  116. A.2. Identifying Noncompliance – Physical Inspections
  117. A.3. HUD’s Uniform Physical Condition Standards (UPCS)
  118. A.4. Local Standards
  119. A.5. Difference between Local Codes and the UPCS
  120. B. In Compliance
  121. C. Out of Compliance
  122. C.1. Level 1 Violations of UPCS
  123. C.2. Level 2 Violations of UPCS
  124. C.3. Level 3 Violations of UPCS
  125. C.4. Health and Safety Violations and Fire Hazard Violations o…
  126. C.5. Casualty Losses
  127. C.6. Vacant Units
  128. C.7. Date of Noncompliance
  129. C.8. Notice to Owner
  130. D. Back in Compliance
  131. D.1. Reporting Noncompliance
  132. D.2. Submitting Documentation to the IRS
  133. E. References
  134. G. Exhibit 6-2: Notification Letter – No Violations Noted
  135. H. Exhibit 6-3: Notification Letter – Noncompliance
  136. I. Exhibit 6-4: Notification Letter – Critical Violations
  137. A. Definition
  138. B. In Compliance
  139. B.1. Disclosure of Noncompliance
  140. B.2. Documentation Requirements
  141. C. Out of Compliance
  142. C.1. Out of Compliance Date
  143. D. Back in Compliance
  144. E. References
  145. A. Definition
  146. A.1. Comercial Use
  147. A.2. Federal Grants
  148. A.4. Federal Grants – Buildings Placed in Service After July 3…
  149. A.5. Funds not Considered Grants
  150. A.6. Loans Funded with Federal Grants
  151. A.7. Resident Managers and Maintenance Personnel
  152. A.8. Security Officers
  153. A.9. Model Units
  154. A.10. Community Service Facilities
  155. B. In Compliance
  156. C. Out of Compliance
  157. D. Back in Compliance
  158. E. References
  159. A. Definition
  160. 31, 2008
  161. B. In Compliance
  162. B.1. Buildings Placed in Service Before July 31, 2008
  163. B.2. Buildings Placed in Service after July 30, 2008
  164. C. Out of Compliance
  165. D. Back in Compliance
  166. E. References
  167. A. Definition
  168. A.1. Project Defined
  169. A.2. Deep Rent Skewed Under IRC §142(d)(4)
  170. A.3. Irrevocable Elections
  171. A.4. Assistance Provided Under HOME and NAHASDA
  172. A.5. Suitability for Occupancy
  173. A.6. Vacant Units
  174. B. In Compliance
  175. C. Out of Compliance
  176. C.2. Date of Noncompliance
  177. D.1. First Year of the Credit Period
  178. D.2. Years Subsequent to the First Year of the Credit Period
  179. D.3. Documentation of Corrected Noncompliance
  180. E. References
  181. F. Definition
  182. F.1. Determination on a Tax Year Basis
  183. F.2. Determination on a Monthly Basis
  184. F.3. Fees – Provision of Services
  185. F.4. Fees – Condition of Occupancy
  186. F.5. Fees – Application Processing
  187. F.6. Changes to HUD Income Limits
  188. F.7. Calculation Methods
  189. F.8. Tenant Income Rises Above Limit
  190. F.9. Section 8 Tenants
  191. F.10. Rural Development (FmHA) Rents
  192. F.11. Supportive Services
  193. F.12. Deep Rent Skewing
  194. (3) IRC §42(i)(2)(E) reads:
  195. G. In Compliance
  196. H. Out of Compliance
  197. I. Back in Compliance
  198. J. References
  199. Category 11h – Project not Available to the General Public
  200. A. Definition
  201. A.1. Fair Housing Act
  202. B. In Compliance
  203. B.1. Marketing
  204. C. Out of Compliance
  205. D. Back in Compliance
  206. E. References
  207. A. Definition
  208. B. The Fair Housing Act
  209. B.1. Reasonable Modification and Accommodation
  210. B.2. Accessibility
  211. B.3. Citizenship Status
  212. B.5. Role of the U.S. Department of Justice
  213. D.1. Potential Violations Discovered by State Agencies
  214. D.2. State Agency Notified by HUD or DOJ that the Terms of Set…
  215. E. IRS Determinations
  216. G. Exhibit 13-1: HUD’s Regional Offices
  217. Preamble
  218. 2) Designating Contacts and Interagency Technical Assistance a…
  219. 3) Training for State Housing Finance Agencies and Others
  220. 4) HUD’s Pilot Program to Train Architects on the Act’s Access…
  221. - 5) Cooperation in Research Concerning Low Income Housing Tax…
  222. 6) Cooperation to Identify and Remove Unlawful Barriers to Sec…
  223. - 7) Cooperation in Assisting Syndicators of Low Income Housin…
  224. 8) Annual Civil Rights Meeting Among Federal Agencies and Part…
  225. Implementation
  226. XII. Category 11i – Violations of the Available Unit Rule Unde…
  227. A. Definition
  228. A.1. Compliance on a Continuing Basis
  229. A.2. Changes in Area Median Gross Income
  230. A.3. Treatment of Vacated Over-Income Units
  231. A.4. Next Available Unit Defined
  232. A.5. Comparable or Smaller Unit
  233. A.6. Summary
  234. B. In Compliance
  235. C. Out of Compliance
  236. C.1. 100 Percent LIHC Projects: Owner Fails to Demonstrate Due…
  237. C.2. Other Non-Compliance Issues
  238. D. Back in Compliance
  239. E. References
  240. A. Definition
  241. A.1. Reasonable Attempts
  242. A.2. Available Low-Income Unit Defined
  243. A.3. Comparable Units
  244. B. In Compliance
  245. C. Out of Compliance
  246. D. Failure to Provide Information
  247. E. Back in Compliance
  248. F. References
  249. A. Definition
  250. B. In Compliance
  251. C. Out of Compliance
  252. D. Back in Compliance
  253. E. References
  254. A. Definition
  255. A.1. Defining “Student”
  256. A.2. Units Comprised Entirely of Full-Time Students
  257. A.3. Verifying and Documenting Student Status
  258. B. In Compliance
  259. C. Out of Compliance
  260. D. Back in Compliance
  261. E. References
  262. F. Exhibit 17-1: Student Status Verification
  263. A. Definition
  264. A.1. PHA Utility Allowance
  265. A.3. Utility Company Estimates
  266. (7) Notification Requirements
  267. A.10. Cost of Securing Utility Estimates – Taxable Years Begin…
  268. A.11. Record Retention
  269. B. In Compliance
  270. C. Out of Compliance
  271. D.1. Rent Exceeds Limit
  272. D.2. No Utility Allowance
  273. D.3. No Annual Review
  274. D.4. Insufficient Documentation
  275. D.5. Reporting Noncompliance
  276. E. References
  277. F. Notes
  278. A. Definition
  279. B. In Compliance
  280. C. Out of Compliance
  281. D. Back in Compliance
  282. E. References
  283. A. Definition
  284. A.1. Buildings Used for Transitional Housing for the Homeless …
  285. A.2. Single-Room Occupancy (SRO) Units Under IRC § 42(i)(3)(B)…
  286. B. In Compliance
  287. C. Out of Compliance
  288. D. Back in Compliance
  289. A. Definition
  290. B. Out of Compliance
  291. B.1. Return of Credits to State Agency
  292. B.2. Egregious Noncompliance with Program Requirements
  293. C.1. Extended Low-Income Housing Commitment
  294. C.2. Protection of Tenants Rights
  295. A. Definition
  296. B. In Compliance
  297. C. Out of Compliance
  298. D. Back in Compliance
  299. (1) IRC §42(h)(5)
  300. A. Definition
  301. B.1. Nonperformance of Extended Use Agreements
  302. B.2. 100 Percent Low-Income Projects: Failure to Complete Annu…
  303. A. Definition
  304. A.1. Types of Building Dispositions
  305. B. References
  306. XXIII. Miscellaneous Noncompliance Topics
  307. A. Tenant Misrepresentation or Fraud
  308. A.1. Reporting Tenant Misrepresentation or Fraud to the IRS
  309. B. Owner/Taxpayer Fraud
  310. A. Definition
  311. A.3. Revenue Procedure 2005-37
  312. A.4. Eviction or “Termination of Tenancy”
  313. A.5. Owner Fails to Renew Lease
  314. B. In Compliance
  315. C. Out of Compliance
  316. C.1. Extended Use Agreement
  317. C.2. Annual Recertification
  318. C.3. Increased Gross Rent
  319. D. Back in Compliance
  320. D.1. Extended Use Agreement
  321. D.2. Annual Certification
  322. D.3. Increased Gross Rent
  323. E. References

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