HUD Publishes 2023 Income Limits
The Department of Housing and Urban Development (HUD) calculates and publishes the income limits, also referred to as the Annual Median Gross Income (AMGI), each year. The Income Limits for 2023 have been released by HUD with an effective date of May 15, 2023.
The Housing and Economic Recovery Act (HERA) of 2008 (HR 3221), modified HUD’s income limit methodology for calendar years after 2008. As a result, effective with the issuance of the 2009 limits, HUD began issuing a separate income limit chart, the Multi-family Tax Subsidy Project (MTSP) chart for Tax Credit and Tax-Exempt Bond properties.
Tax credit regulations require owners of Low-Income Housing Tax Credit (LIHTC) properties to implement new income limits based on the MTSP chart within 45 days of the effective date, meaning for this year all LIHTC properties must be using the new 2023 income and rent limits on or before June 28, 2023.
The MTSP income limit chart includes the HERA Special Limits which are to be used in specific counties for properties placed in service prior to January 1, 2009. Properties placed in service after December 31, 2008 must use the regular limits.
The Pennsylvania Housing Finance Agency (PHFA) publishes the income chart with calculated figures for various percentages of median income limits and based on site-specific requirements. PHFA requires that their charts be used; however, owners and managers are encouraged to check these numbers for accuracy. The IRS has taken the position that the owner is responsible for using the correct income limit number.
Please keep in mind that if a development has not yet received its 8609, the property will not be in the PHFA Portal and, therefore, will not have a site-specific income and rent limit chart prepared by PHFA until the 8609 is issued. Developments not in the PHFA Portal will be responsible for ensuring they are using the correct income and rent limits for their property.
Newly published limits do not always mean an increase has occurred. In some cases, limits may decrease. LIHTC properties are held harmless from income limit (and therefore rent) reductions. LIHTC properties may use the highest income limits used for resident qualification and rent calculation purposes since the development has been in service. HOME & HUD program income limits are not held harmless.
Creating and maintaining affordable housing communities is a complex task. Numerous state and federal requirements must be followed – both during development and for years thereafter. M&L Compliance Management clarifies LIHTC, Federal HOME, HUD, and certification requirements you must follow to remain compliant. For more information on these services be sure to visit our Property Compliance page and don’t hesitate to contact us. The information presented in this post is intended solely for informational purposes and should not be construed as consulting advice from M&L Compliance or McKonly & Asbury, LLP.