# How Is Income Calculated for Section 8 Housing?

## How Are Allowable Assets Determined?

In U.S. Department of Housing and Urban Development (HUD) affordable rental housing programs, owners and public housing agencies must determine annually a family’s income for eligibility. Included in the calculation is projected income from assets.

Here’s the difference between assets and income.

The government has a specific definition of income that it uses to determine a household's or an individual's eligibilty to receive certain benefits.

Assets themselves are not counted as income. But any income that an asset produces is normally counted when determining a household's income eligibility.

A family's income and assets, if they produce income, are determined annually to decide eligibility for Section 8 housing.

The (HUD) defines assets as "items of value that may be turned into cash." Necessary personal property items—clothing, furniture, cars, a wedding ring (or other jewelry not held as an investment)—do not qualify as assets, even though they could be sold for cash.

Some forms of payment are generally considered assets, such as a lump sum from an inheritance, insurance settlement, or proceeds from the sale of a house or apartment. The difference is the delivery method: Periodic payments would be counted as income. If a tenant living in a tax credit property won a lawsuit and was awarded compensation, for instance, they could choose between a structured settlement and a lump-sum payment. The lump sum would count as an asset; the periodic payments must be regarded as income.

## Counting Assets

There's a big difference in the impact 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. 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 2%) to determine the "imputed income." As of April 2021, the Savings National Rate was .06% so managers are allowed to use passbook rates from 0.0% to 0.81%.

If the total value of all household assets is greater than the actual income from the household's assets, it's used instead. There is one exception to this rule: If a tenant is receiving below-market interest rate (BMIR) assistance, no imputed income is calculated.

## The Bottom Line

The definitions of assets and income are key to determining eligiblity for benefits such as subsidized housing, such as tax-credit properties.

Owners and public housing agencies must adhere to specific rules when determining the value of assets and income.

Article Sources
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1. U.S. Department of Housing and Urban Development. "Chapter 5. Determining Income and Calculating Rent." Page 1.

2. U.S. Department of Housing and Urban Development. "Housing Choice Vouchers Fact Sheet."

3. U.S. Department of Housing and Urban Development. "Chapter 5. Determining Income and Calculating Rent." Page 23.

4. Federal Deposit Insurance Corporation. "Weekly National Rates and Rate Caps—Weekly Update."

5. U.S. Department of Housing and Urban Development. "Chapter 5. Determining Income and Calculating Rent." Page 20.

6. Federal Deposit Insurance Corporation. "Fact Sheet for HUD Assisted Residents." Page 2.

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