When reviewing leases for Low-Income Housing Tax Credit (LIHTC) compliance, key mistakes to avoid include:
- Incorrect household income calculations
Failing to properly account for all income sources (e.g., wages, asset income) and household members during tenant certification. This is the most frequent compliance error. - Incomplete tenant documentation
- Missing forms like rental applications or income verification records.
- Inconsistent information between documents (e.g., employment details conflicting across forms).
- Mishandling tenant transfers
- Failing to recertify tenants who move between buildings within mixed-income projects, especially when buildings are classified as separate LIHTC projects.
- Allowing tenants over 140% of income limits to transfer to other LIHTC units instead of market-rate units.
- Improper rent documentation
Recording pending subsidy amounts rather than actual collected rents, particularly when Section 8 applications are in process. - Utility allowance errors
Using outdated utility allowance calculations that don’t match current HUD or local guidelines, leading to incorrect tenant rent contributions.
Proactive measures: Implement double-verification systems for income calculations, maintain move-in/move-out logs, and conduct periodic file audits to catch discrepancies early.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/are-there-any-common-mistakes-to-avoid-when-reviewing-a-lease-for-tax-credit-compliance/
