LIHTC Student Rules and Exceptions

By Megan Brownell, Associate

Being a recent college graduate, I was often frustrated with how expensive rent can be, especially in comparison to how little I was able to work and make money as a full-time college student. Taking 14-18 credits per semester didn’t leave much time to work. While my income level may have been low enough to qualify for a low-income unit, there was one major factor that disqualified me: being a full-time student.

Who is Considered a Full-Time Student?

The IRS considers any individual who is enrolled in classes (kindergarten through 12th grade, or qualifying education organization) for five months, consecutive or nonconsecutive, of the calendar year to be a full-time student. According to legislative history, “In no case is a unit considered to be occupied by low-income individuals if all occupants of such unit are students (as determined under sec. 151(c)(4)), no one of whom is entitled to file a joint income tax return.” Notice the exception for filing joint income tax returns? This is just one of five exceptions for the LIHTC student rule.

Low Income Housing Tax Credit Student Rule Exceptions

• A household is comprised of students that are married and file a joint income tax return.
• An individual is a student that receives assistance under Title IV of the Social Security Act (the Temporary Assistance for Needy Families (TANF) program).
• An individual is a student enrolled in a job training program and receiving assistance under the Job Training Partnership Act or under similar federal, state, or local laws.
• An individual is a student that was previously in the foster care program.
• A household is made up of full-time student single parents and their children, and such parents and children are not dependents of another individual. No tenants (parents or children) can be dependents of a third party.

Without meeting one the above exceptions to the student rule, the LIHTC program does not allow households made up of entirely full-time students to lease at tax credit properties.

For additional considerations, please reach out to Megan Brownell, Associate, or contact our Real Estate Solutions Team at Mahoney to be of help to you in any way.