Are assets counted as income? No. Assets themselves aren't counted as income, however, any income that an asset produces is normally counted when determining the income eligibility of a household.
The U.S. Department of Housing and Urban Development (HUD) defines assets as "items of value that may be turned into cash." Necessary personal property, however, doesn't qualify as an asset. Common examples include clothing, furniture, cars, a wedding ring (or other jewelry not held as an investment), and vehicles specially equipped for people with disabilities.
It's also important to note that lump sum payments, such as an inheritance, insurance settlement, or proceeds from the sale of a house or apartment are generally considered assets, while periodic payments would be counted as income. If a tenant of a low-income apartment in a tax credit property is lucky enough to win the lottery, for example, a lump sum payment of the prize would count as an asset, while periodic payments must be regarded as income.
As you'll see, there's a big difference in the effect of an asset versus income on household eligibility. If a tenant has any assets, the property manager will need to know the value of those assets as well as the amount of income they produce, if any.
The manager must then add up the value of all household assets. If the total is $5,000 or less, then the actual income these assets produce is what's counted. However, if the total is greater than $5,000, there's an additional calculation to perform. The manager must multiply the value of an asset by .02 (reflecting the current HUD passbook savings rate of two percent) to determine the "imputed income." If this number is greater than the actual income from the household's assets, it's included instead. (Note: There is one exception to this rule: If a tenant is receiving BMIR (Below Market Interest Rate) assistance, then no imputed income is calculated.)
As a quick, easy example, say the Smith household has one asset in the form of $5,000 cash kept hidden in a box under the bed. The Jones household is in the same situation, however, they have $6,000 in cash. The property manager would count $0 as income from assets for the Smith household and $120 as income from assets for the Jones household (that is, two percent of $6,000). This is the amount the Jones' cash would have earned if it had been in a savings account.
Applicants for low-income apartments at a tax credit property should be sure to point out if they don't actually own an asset that they may appear to own at a glance. HUD requires managers not to count assets that aren't "effectively owned" by an applicant, even if it's in that person's name. This is the case if the asset (and any income it earns) accrues to the benefit of someone else (who isn't part of the household) and that person is responsible for the income taxes incurred on income generated by the asset.
Finally, if a tenant shares ownership of an asset with other people (not part of the household), then the manager should normally prorate that tenant's share (a similar concept to prorating rent). For example, if Jane has equal ownership of a rare coin collection (held for investment purposes) with her brother, and the value of the collection is currently worth $3,500, then $1,750 should be counted as an asset for Jane (representing her 50 percent interest in the collection).