G.8. Assets — IRS Publication 5913 — Low-Income Housing Credit: Guide for Completing Form 8823 (Jan. 2024)

(1) There is no limit on the amount of assets a household may hold and a household is not required to convert an asset to cash.
(2) Assets include bank accounts, trusts, stocks and bonds, the surrender value of life insurance policies, and cash kept in safety deposit boxes or at home. Onetime, lump sum distributions are considered assets; e.g., inheritances, capital gains, victim’s restitution and settlements on insurance claims. Lottery winnings paid in one lump payment are treated as assets. Lottery winnings paid in periodic payments must be counted as income. Lump sum payments of deferred periodic payments of supplemental security income and social security benefits are also considered assets.
(3) For non-cash assets held for investment, the cash value is the net amount the household would receive if the assets were converted to cash. The cash value is the market value, or the amount another person would pay to acquire the asset, less the cost to turn the asset into cash.

(4) Assets do not include necessary personal items such as clothes, furniture, cars, wedding rings, or vehicles specially equipped for persons with disabilities. Assets used in a business are not assets included in the computation of the tenant’s income. If an asset is held in the tenant’s name, but the income generated by the asset accrues to someone who is not a member of the household and the other person is responsible for income taxes on the accrued income, then the asset is not included in the tenant’s income.
(5) Lump-sum additions to the household’s assets, such as inheritances, insurance proceeds (including payments under health and accident insurance and worker’s compensation), capital gains, and settlements for personal or property losses are excluded from income.
(6) Example 1: Exhausting an Asset
- A tenant receives a lump sum inheritance of $12,000 and deposits the money in a savings account. The asset is disclosed and the income from the asset correctly accounted for at the time of the initial income certification. The tenant subsequently withdraws $1,000 each month to pay personal living expenses. A year later, when the annual income recertification is completed, the bank account balance is zero. The monthly withdraws retain their character of an asset; i.e., they are not considered income. There is no need to include the bank account as an asset in subsequent annual income recertifications since the balance is zero.
(7) Assets disposed of for less than fair market value within two years of the effective date of a tenant’s initial certification or recertification, including assets placed in irrevocable trusts, are included as an asset in the determination of the tenant’s income. Assets are considered to be disposed of for less than fair market value if the cash value of the assets disposed of exceeds the gross amount the tenant received by more than $1,000.
(8) Example 2: Tenant Disposed of Assets for Less Than Fair Market Value
During April of 2009, Jackson Jones gave each of his three children $500. In September of 2009, he applied for low-income housing. Because the total ($1,500) exceeds the $1,000 limit, the gifts are treated as assets disposed of for less than fair market value and are included as income on his application.
- Note: The gifts should also be reported as income for the 2010 income recertification if the lo -income unit is in a mixed-use building. See Chapter 14 for details.
(9) Do not include assets disposed of for less than fair market value as the result of a foreclosure, bankruptcy, or divorce or separation agreement if the applicant or tenant receives valuable consideration not measurable in dollars.

(10) Assets must be verified, the income generated from assets must be determined, and the income included in the computation of the household’s income.
- If the total cash value of a household’s assets is more than $5,000, imputed income must be calculated using the current HUD passbook rate27 and the greater of the actual income or imputed income must be included in the household’s income. Refer to the HUD Handbook 4350.3, paragraph 5-7F, for the passbook rate, which is currently set at 2%.
- If the total cash value of the household’s assets is $5,000 or less, the actual income the tenant receives from assets is the amount included in annual income as income from assets. An owner may satisfy asset verification requirements by annually obtaining a signed, sworn statement from the tenant certifying that the tenant’s net family assets are $5,000 or less and disclosing the tenant’s annual income from net assets. Owners, however, may not rely on a low-income tenant’s signed, sworn statement of income from assets if a reasonable person28 in the owner’s position would conclude that the tenant’s income is higher than the amount presented by the tenant. In such cases, the owner must obtain other documentation of the low-income tenant’s annual income from assets to satisfy documentation requirements.[29]