N. Out of Compliance — IRS Publication 5913 — Low-Income Housing Credit: Guide for Completing Form 8823 (Jan. 2024)

(1) Units are considered out of compliance as of the date an ineligible household moves into a unit. A unit will also be considered out of compliance if the initial

tenant income certification is inaccurate, documentation of initial eligibility is insufficient, or no initial tenant file is on record.47

(2) Example 1: Specific Source of Income Omitted
- Annual Income was not properly calculated. The manager/owner did not include a source of income, such as a raise, overtime, or bonus. When reviewed, a correct calculation indicates that the household was not income eligible at move-in.
(3) Example 2: Household Incorrectly Determined to be Eligible
- The owner calculated annual household income correctly, but the household is over the appropriate income limit at move-in. For example, the owner may have used the income limit for the 40/60 minimum setaside when the income limit for the 20/50 minimum set- aside income limit was required, or the wrong county AMGI, or the income limits used were not in effect as of the date of the tenant income certification.
(4) Example 3: Unrelated Parties Sharing an Apartment
- Tom and Jack are unrelated individuals who want to rent a two- bedroom apartment in an LIHC building. Tom and Jack individually have incomes that do not exceed 60% of AMGI for one individual. However, Tom’s and Jack’s combined income exceeds 60% of the AMGI for a two-individual family.
- In this case, Tom and Jack do not qualify for LIHC housing. For purposes of computing the Gross Annual Household Income, the combined income of all the occupants of an apartment, whether or not legally related, is compared to the median family income for a household with the same number of members.
(5) Example 4: No Initial Tenant Income Certification on File
- A household moves into a unit that the owner wishes to include as an LIHC unit. However, the owner does not provide documentation of initial eligibility at the time the state agency reviews the tenant’s file. The owner cannot substantiate that the unit qualifies for the LIHC.
(6) Example 5: No Initial Tenant Income Certification on File for New Member of Household
- An income qualified household moved into an LIHC unit. Six months later, an adult friend moved into the unit with the household, but no initial tenant income certification was completed for the additional member of the household.
(7) Example 6: Initial Tenant Income Certification Performed After Move-In (Late Certification)
- A household moved into a unit that the owner wanted to include as a lowincome unit. However, the certification of income eligibility, including the

third-party verification, was not performed until after the household moved in.

(8) Example 7: Insufficient Documentation of Initial Eligibility
- A household moves into a unit that the owner wishes to include as a lowincome unit. Income eligibility was not properly documented. The state agency could not reasonably determine that the household was income qualified. The following are possible documentation noncompliance issues:
Application/questionnaire is not sufficiently detailed to disclose all sources of income and/or assets,
- Not all sources of income are verified,
- Not all sources of assets are verified,
- Verifications are insufficient,
- Not all adult household members’ income and/or assets are disclosed and included.
- Tenant income certification form is not prepared, signed and/or dated; and
- Other state-required forms designed to document compliance with IRC §42 are not in file.