HUD Releases MTSP Income
Limits for 2018
On April 1, 2018, HUD
released the 2018 Multifamily Tax Subsidy Project Income Limits (MTSP),
with an effective date of April 1, 2018. The limits are available in
DevCo Online as of April 23rd. The MTSP limits are issued in response
to changes in the income limit methodology as required under the
MTSP limits include HERA special limits and are subject to change each
year; however, a project can "hold harmless" or maintain use
of an existing limit when the new limit decreases. The counties with
HERA special limits for 2018 have changed significantly. The MTSP
limits are for use by housing tax credit and multifamily bond projects.
OHFA has posted online the MTSP Income and Rent limits based
on the 50 percent and 60 percent of area median income (AMI)
The applicable income limit
for a housing tax credit or multifamily bond project is based on the
year in which the building is placed in service and the county in which
the building is located. Buildings within projects may have various
placed-in-service dates, so owners should use caution when selecting
the income limit(s). The income limit for a building is based on one of
the following two criteria:
- Buildings placed-in-service prior to
the highest MTSP income limits or HERA limits from the
placed-in-service date to now.
- Buildings placed-in-service on or
Apply the highest MTSP income limits from the placed-in-service
date to now. Note: Projects placed-in-service on or after
1/1/2009 cannot use the HERA special limits.
Example: Tiffin Senior was
placed-in-service in 2015 in Putnam County. Its four-person, 60
percent MTSP income limit would have been $37,900. In 2018, the MTSP
income limit applicable to Tiffin Senior would remain at $37,900,
despite the fact that the MTSP income limit for Clinton County in 2018
is $37,800. However, a new housing tax credit development, Salmon
Chase, placed-in-service in 2018 in the same county would use the 2018
MTSP income limit $37,800.
Project rents are also calculated based on the higher of the income
limit in effect since the placed-in-service date or the latest income
limit. When determining the applicable limits to be used at a property,
the following additional considerations must be considered and followed
- Housing tax credit projects with
either HOME or HDAP (Housing Development Gap Financing) must use
the current HOME limits for all
HDAP-assisted units. Units using HOME or OHTF must
continue to use the 2017 HOME income and rent limits until HUD
issues the 2018 HOME income and rent limits.
- Projects financed with HUD programs, such as Section 8 or Rural
Development 515 projects, cannot use the HERA income and rent
limits and must use current MTSP limits.
- An owner should follow the guidance in IRS Revenue Procedure 94-57 for
rent limits which describes the process for electing a gross rent
floor. Based on this, a project could have a rent floor based
on an income limit higher than the limit used to determine
Owners seeking additional
guidance regarding the appropriate housing tax credit income and rent
limits and gross rent floor may wish to refer to the Novogradac &
Company rent and income calculator. The HOME program
limits are not available through this calculator. Note: Use of the
Novogradac rent and income limit calculator is not a safe harbor for
violations of rent and income restrictions.
Owners have 45 days to implement the new
limits (or by May 16, 2018).