Income Qualification: Assets & Recertification

Overview Asset Income Asset Specifics Income at Recertification

Asset Income

What is considered to be an asset? Par. 5-7A, Page 5-23 What is considered to be an asset? Items of value that may be turned into cash Assets must be accessible to the applicant/ resident Some items of value are not considered assets Count all assets/asset income of all family members =======================================================================================

Asset Inclusions & Exclusions Exhibit 5-2 Asset Inclusions & Exclusions

Determining Cash Value Exhibit 5-2; Par. 5-7C, Pg. 5-24 Determining Cash Value Citation Asset Cash Value Exhibit 5-2 Savings accounts Current balance Checking accounts and IRAs that are being occasionally withdrawn from 6 month average balance Par. 5-7C Other assets Market value of asset minus Cost(s) to convert to cash CHRIS: SAME FOR CITATIONS HERE =============================================== The cash value is the amount the family could receive in cash, if the family converted an asset to cash Remember: A family is not required to convert an asset to cash

Income from Assets Income from Assets Par. 5-7B, Page 5-23; Par. 5-7E & F, Pg 5-27 to 5-29; HUD Notice H2014-15 Income from Assets Income from Assets What is total cash value of assets? Calculate total actual yearly income from assets * <= $5,000 Total income from assets is total actual yearly income from assets Calculate imputed income by multiplying asset’s total cash value x 0.06% > $5,000 * Sum of actual yearly income household receives for each asset ============================================================================== Total income from assets is greater of actual income or imputed income

Asset Specifics

Income from Trusts Income from Trusts* Par. 5-7G1, page 5-29 Income from Trusts Income from Trusts* If any family member has the right to withdraw the funds from the account, the trust is an asset: Cash value of the trust is added to total assets Income to a family member, from the trust, is added to actual income from assets Example: Family Member creates a Revocable Trust =============================================================================== © 2010 The National Center for Housing Management 9 9

Par. 5-7G1, page 5-29 Income from Trusts If no family member has the right to withdraw the funds in the account: The trust is not counted as a family asset Any family income from the trust is counted as non-asset income Example: Family member creates a Nonrevocable trust and no family member has access to principal =============================================================================== © 2010 The National Center for Housing Management 10 10

Not an asset unless it can be taken as a lump sum Par. 5-7G2, page 5-33 Income from Annuities Not an asset unless it can be taken as a lump sum If annuity proceeds are received in regular or periodic payments, count it as non-asset income. The balance of the annuity is not counted as an asset =============================================================================== © 2010 The National Center for Housing Management 11 11

Income from Retirement Accounts Par. 5-7 G4b & 5-7 G4d, Pages 5-36 & 5-37 Income from Retirement Accounts IRA, Keogh, and similar retirement savings accounts are counted as assets, *unless benefits received through periodic payments* Include any retirement benefits received through periodic payments in annual income *Don’t count remaining amounts in the account as an asset* ================================================= © 2010 The National Center for Housing Management 12 12

Mortgage or Deed of Trust Paragraph 5-7G7, page 5-37 Mortgage or Deed of Trust Referred to as “contract sales” Cash value is amount owed as of effective date Payments divided into principal and interest, with interest portion counted as asset income ========================================================== © 2010 The National Center for Housing Management 13 13

Income at Recertification

140% Rule If household income exceeds the current applicable income at recert: Unit is designated as over-income 100% 140% Applicable income limit Household remains eligible and unit is considered tax credit qualified

If over-income at recertification: Available Unit Rule If over-income at recertification: The next available unit of comparable or smaller size in the same building must be rented to a qualified household To maintain tax-credit status of the over-income unit: Rent must remain restricted Household may not transfer to another building CH

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