Section 42 FAQ
Here are some frequently asked questions and answers regarding Section 42 communities:
Q: How does Section 42 differ from other rent assistance programs like Section 8?
A: The residents who live in Section 42 housing must be income and program eligible, similar to residents who live in rental assistance developments. However, the programs differ in that the rent a Section 42 resident will pay is capped at a fixed amount and there are full-time student restrictions. In contrast, under other rental assistance programs such as Section 8, the rent amount paid by the resident is based on 30 percent of his/her adjusted income and the federal government funds the remaining portion. The Section 42 Program is not a government-subsidized rental program.
Q: How do I find out if I am eligible for a Section 42 tax credit unit?
A: You will be asked to complete forms that request information regarding your income, family composition, student status, and financial assets. This information will aid community management in determining your eligibility for the program.
Q: What are assets?
A: Assets are your valuables other than personal items that must be considered when determining your family income. Examples include savings accounts, certificates of deposit, stocks and bonds. Personal items such as your car, furniture, etc. are not included.
Q: What is Compliance?
A: Compliance means that you fit all guidelines necessary to live in a Section 42 apartment.
Q: Who determines the maximum income levels?
A: Income levels are determined by the Department of Housing and Urban Development (HUD) for each county or metropolitan statistical area.
Q: How is my maximum income level determined?
A: Your maximum income level is based on the number of people in your household and the combined gross income (before taxes and deductions).
Q: What is counted as income?
A: All income is counted, including monies from earned income such as salaries and wages, unearned income such as AFDC and Social Security as well as income from your assets such as checking accounts, savings accounts, lump sum settlements, child support, alimony, profits from the sale of real estate, etc.
Q: If my income qualifies, do I get a Section 42 apartment?
A: No. It simply means that the Owner/manager of a Section 42 community may further process your application using standard screening policies and procedures.
Q: How is rent determined?
A: Rents are determined by HUD based on the median (average) county income and the number of bedrooms per each unit. From this gross rent amount, a predetermined amount for utilities (excluding cable and telephone) is then subtracted to determine a net rent amount per each unit size.
Q: Do I have to certify my income and household size every year?
A: Yes, your income, household size and student status must be recertified each year.
Q: Can someone else live with me?
A: The apartment is being rented to you and the people you identified on the rental application. Section 42 guidelines require that you immediately notify the Owner/Manager in writing prior to any changes in your household arrangement. Based on this new information, you will be required to complete the qualification and certification process again.
Q: Can I take a credit on my tax return?
A: The tax credit applies only to the Owners of the apartment community and not to your personal income taxes. However, your state may have other rent and/or homestead credits for which you may be eligible.
Q: Why are some of the units in my building not income restricted?
A: Apartment Owners have the right to choose whether or not to offer “mixed-income” housing. Therefore, all units in a community may not be available under Section 42 guidelines and could be priced at the market rent rates (rates that are determined by comparable apartment communities in that area).
Q: How do I apply?
A: The Apartment Owner/Manager will provide you with the necessary forms. The community’s Leasing Agent or other office staff will be happy to assist you with the application process.