1. (a)

   1. (1) Under the Department of Housing and Urban Development Section 8 Program, a tenant cannot pay more than thirty percent (30%) of his or her adjusted gross income for rent.
   2. (2) For this reason, in 1989 the Internal Revenue Service ruled that if the tenant portion of rent increases above the LIHTC maximum allowable rent, thereby reducing the Section 8 subsidy, the higher rent may be charged.

2. (b)

   1. (1) Owners must make sure the total tenant payment does not exceed the maximum LIHTC rent at time of move-in.
   2. (2) A low-income resident may pay more than the restricted tax credit rent in one (1) situation.

   3. (3) If a federal rental subsidy, such as Section 8, is paid on behalf of a low-income resident, I.R.C. § 42(g)(2)(E) permits the resident to pay more than the maximum LIHTC rent if:

      1. (A) The excess of gross rent over the applicable rent limit is due to the tenant's income, at recertification, now exceeding the applicable income limit;
      2. (B) A federal rental assistance payment is made on behalf of the tenant; and
      3. (C) The sum of the rental assistance payment and the gross rent for the unit does not exceed the amount of rental assistance payment and gross rent that would be paid for the unit if the:

3. (i) Income of the tenant did not exceed the applicable income limit; and

   1. (ii) Unit was rent restricted.

      1. (c)
   2. (1) An owner may collect more than the tax credit allowable rent from a tenant in the situation described herein.

   3. (2)

      1. (A) However, the owner does not receive more total rent than he or she received prior to the increase in the tenant's income.

      2. (B) In other words, while the tenant pays more, the rental assistance payment is less.

         1. (d) If no Section 8 subsidy is paid on behalf of the tenant, the tenant portion cannot exceed the allowable tax credit rent.
4. (e) Note. At move-in, all tenants must qualify under I.R.C. § 42 LIHTC regulations.

Codification Notes: "Section 8" refers to Section 8 of the Housing Act of 1937 and is codified at 42 U.S.C. § 1437f. "LIHTC" means low-income housing tax credit.