A Quick Look at the 2016 Income Limits

Published by Michael Novogradac on Friday, April 15, 2016 - 12:00am

The U.S. Department of Housing and Urban Development (HUD) released income limits March 28 for fiscal year (FY) 2016, continuing its policy of releasing sets for both Section 8 and multifamily tax subsidy project (MTSP). The MTSP income limits determine maximum gross rent and tenant income qualification for developments funded with low-income housing tax credits (LIHTCs) and tax-exempt housing bonds.

Gross rent will increase for existing MTSPs in approximately 26 percent of counties; the balance will remain flat.

Highlights of the Changes

The MTSP income limits increased from FY 2015 to FY 2016 in 36 percent of counties, decreased in 58 percent of counties and had no change in 6 percent of counties. However, those changes do not take into account Housing and Economic Recovery Act (HERA) special income limits and hold-harmless provisions. After taking those limits and provisions into account, and using FY 2009 as a base year for hold harmless, the income limits remained unchanged in 74 percent of counties and increased in 26 percent of counties for MTSPs. A sortable chart of the income limit changes can be found at http://www.taxcredithousing.com.

Blog Graph Change in HUD-Published Multifamily Tax Subsidy Project Income Limits from 2015-2016
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HUD continues to apply a floor and ceiling to any increases or decreases to MTSP income limits, but not to HERA special limits. Annual decreases for MTSP income limits are limited to no more than 5 percent, and all annual increases are limited to the greater of 5 percent or twice the percentage change in the national median family income. The national median family income in 2015 was $65,800, and is $65,700 in 2016. The change from FY 2015 to FY 2016 is negative 0.152 percent; therefore increases for 2015 were capped at 5 percent. The following is a table listing the number of counties and metropolitan areas with limits floored and limits capped:

Blog Chart Type Income Limit Calculation
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Learn More

Additional explanation and analysis will be published in the May 2016 issue of the Novogradac Journal of Tax Credits, and a recording of “2016 HUD Rent and Income Limits and Your Tax Credit Property: Back to Basics Webinar” is available.

In addition, the Novogradac Rent & Income Limit Calculator© has been updated in beta version to include fiscal year 2016 rent and income limit data. The beta version of the calculator is undergoing additional testing and results are subject to change. We strongly recommend that you rerun any calculations from the beta version again when the final version is posted later this month.

Note, there is an enhanced version of the Rent & Income Limit Calculator© as well that allows users to save property-specific data into the calculator (rent floor election, AMGI percentages, placed-in-service dates) and have that data easily accessible for an in-house compliance team as well as to provide reports to property owners and management.

If you have questions about the income limits, the enhanced Rent & Income Limit Calculator©, or would like to engage Novogradac & Company LLP to calculate the rent and income limits for your property, please contact Thomas Stagg.