Why income certification matters more for LIHTC
The Low-Income Housing Tax Credit is governed by Section 42 of the Internal Revenue Code. In exchange for the credits, owners commit to keeping units occupied by income-eligible households for an extended compliance period. The tenant income certification is the evidence that each unit is doing its job. When a certification is wrong, the credits tied to that unit can be at risk — which is why investors and state agencies scrutinize these files so closely.
The applicable income limit
Every LIHTC household is measured against an income limit set by HUD for the property's county (or metro area), the household size, and the program year, at the elected percentage of Area Median Income (for example 50% or 60% AMI, or an average under the income-averaging election). Using last year's limit, the wrong county, or the wrong household-size column is one of the most common — and most avoidable — mistakes. Limits change annually, so the certification has to reference the correct, current figure.
Initial certification vs. recertification
Every LIHTC household completes a full initial certification at move-in. After that, recertification rules depend on the building:
- 100%-affordable buildings: after the first-year certification, the IRS no longer requires the annual income recertification — though owners must still follow their state agency's documentation and file-keeping rules.
- Mixed-income buildings: annual recertification is still required to demonstrate the applicable fraction is maintained.
Because state monitoring agencies layer their own requirements on top of the federal rules, always confirm the exact obligation with the agency that monitors your property.
The errors that cause 8823 findings
When a state agency identifies noncompliance, it reports it to the IRS on Form 8823. The recurring causes tied to income certification are:
- Income calculated against the wrong limit (year, county, or household size)
- Annualization errors — miscounting pay frequency, overtime, or bonuses
- Missing signatures or dates on the certification
- Supporting documentation missing from the file
- A late recertification where one was required
Get the limit and the math right, every time
Affordabletic keeps current income and rent limits for every U.S. county on hand, annualizes paystubs with a built-in worksheet, and won't let an unsigned or incomplete certification through. Residents complete and e-sign online; the executed form comes back to you ready to file.
Sign up your property → Try the live demoRelated reading: What is a tenant income certification? · Income certification FAQ