LIHTC & Section 8: Active-Duty Military Households

The U.S. Department of Housing and Urban Development (HUD) and the IRS Low Income Housing Tax Credit (LIHTC) program encourage property owners and management agents to exercise reasonable flexibility when supporting households affected by active military duty. These situations require sensitivity, as families may face unique challenges when a household member is called to serve.

Guidance for Supporting Military Households

HUD and the IRS 8823 Guide outline specific actions owners and agents should take to support affected military families. These include, but are not limited to:

• Temporary Guardianship: The head of household may request a guardian to move into the assisted unit temporarily to care for dependents left behind. The guardian’s income is excluded from family income calculations and does not affect rent.
• Dependent Care by Tenants: A tenant may care for the dependents of an active-duty service member on a temporary basis, provided the head and/or co-head remains on active duty. Income belonging to the dependent child (e.g., SSI or military benefits) is not considered income of the temporary caretaker.
• Late Rent Considerations: Owners/agents should review cases of delayed rent payments with leniency and determine if late payments may be accepted.
• Lease Continuation During Deployment: Assistance payments and leases may remain in effect beyond the period required under the Servicemembers Civil Relief Act (SCRA) formerly known as the Soldiers’ and Sailors’ Civil Relief Act of 1940 (50 U.S.C. §§ 501–591), depending on the length of deployment. Consult legal counsel for more information on this law and questions on leases.

Annual Recertifications and Military Deployment

If the annual recertification (AR) falls due during deployment, the owner/agent should document the reason for the delay and note the tenant will complete the AR upon return. Deployment papers must be submitted for their tenant file.

TRACS Extenuating Circumstances for Military Deployment (Applicable to Section 8 Only)

If the property has Section 8 funding and submits form HUD-50059 to TRACS, the owner/agent will still submit the AR when due however, owners should use TRACS Extenuating Circumstance Code 2 (“Late AR due to accommodation or other extenuating circumstances”). Extenuating circumstances are situations beyond the tenant’s control that prevent compliance with program requirements such as timely recertification.

For the HUD tenant file, the HUD-50059 form requires both tenant and owner signatures before data is submitted to the Contract Administrator or HUD. However, if an adult household member is unavailable due to Military service, the owner may document the file to explain the missing signature and indicate when it will be obtained.

Finally, a Few Things to Remember About Military Income and Household Members

Hostile Fire Pay: Remember that special military pay received for exposure to hostile fire is excluded from annual income. (See 24 CFR 5.609(c)(7)).

Temporarily Absent Members: A deployed member may be removed from income calculations unless they are the head, spouse, or co-head of household.

Owners and Management Agents should be well trained in understanding the rules and regulations of the affordable housing programs pertaining to their properties as they relate to maintaining compliance. MLCM offers consulting services and training regarding various affordable housing programs. For more information on these services, don’t hesitate to contact us.

The information presented in this article is intended solely for informational purposes and should not be construed as consulting advice from M&L Compliance Management LLC.

About the Author