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Students and LIHTC





Students continue to be a hot topic in the affordable housing industry, and for good reason. Neither HUD nor the IRS see affordable housing as dormitory housing; however, they understand that being a student is also important. I have created a quick breakdown to assist it different program rules.


To start, I will review the two more common programs: LIHTC and Bond. Households comprised entirely of full-time students for five or more months during the calendar year are not eligible for a LIHTC unit. The five months do not have to be consecutive and it is considered a month even if the student is only active for one day during that month. It is up to the school to tell you what constitutes as fulltime. The student eligibility requirement includes students in elementary, middle/ junior/ senior high school and institutes of higher learning.


Checking fulltime student status is an ongoing LIHTC requirement, not just an initial occupancy restriction. A household may be income-qualified, but if the household is comprised entirely of fulltime students and does not meet an exception, they do not qualify for an LIHTC unit.


There are five exceptions to this rule. If the household is comprised of:


1. A single parent and their children and such parents are not dependents of another individual other than a parent of such children.

a. Verify by a tax return.

2. Students who are married that are entitled to file a joint federal income tax return with a spouse.

a. Verify by a tax return or a marriage certificate.

3. Receiving assistance under the Title IV of the Social Security Act, including TANF.

a. This can be verified by an award letter.

4. Enrolled in and receiving assistance under the Job Training Partnership Act (JTPA), or a similar governmental job training program such as Workforce Investment Act (WIA).

a. Mission statement must be like the one for the JTPA program.

5. A household member has been a part of the foster care program and is in transition to independence.

a. Verify by foster care or welfare agency.


This is applicable to ALL projects for which HOME funds are committed and is effective for all income determinations completed after 8/23/2013.


As for HOME, the student rule is triggered when ANY member (see exclusions below) is a student, be it part-time or full-time. So, HOME makes no distinction between part-time and fulltime.


See a comparison graph:



If a unit receives HOME funds (even if it is combined with LIHTC or other funding programs) it excludes any adult student that:

  1. Is enrolled in a higher education institution

And

  1. Is under age 24 (the focus is on adults ages 18-23)

or

  1. Is not a veteran of the U.S. military

  2. Is not married

  3. Does not have a dependent child(ren)

  4. Is not a person with disabilities who received assistance prior to 11/30/2005

  5. Is independent from parents or has parents who are income eligible.

  6. #7 refers to being eligible for Section 8. So, if the student’s parents are eligible to receive Section 8 then they would meet exception #7.

  7. To prove that a person age 18-23 is independent, owners must document that they are:

  8. Legal age under state law AND

  9. Have established separate residence (dorms and other student housing do not qualify) from parents for at least a year OR meet the U.S. Department of Education definition of independent student, AND

  10. Are not claimed on parents’ tax return AND

  11. Do not receive financial help from parents

Excluded students are prohibited from receiving any type of HOME assistance, including renting HOME-assisted rental units, receiving HOME tenant-based rental assistance, or otherwise participating in the HOME program independent of their low, or very low-income families.

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