Rental Property Income Requirements

The TIF Act requires that rental property in a TIF housing district must comply with the Internal Revenue Code’s income requirements for the duration of the district. This differs from the Act’s income requirements for TIF housing districts comprised of owner-occupied property, which apply only to the initial purchasers/occupiers. The “for the duration of the district” requirement applicable to rental property housing districts means that for such districts, TIF authorities must maintain and be prepared to produce documentation of ongoing compliance with the income requirements (generally, 20 percent of units be occupied by persons or families at 50 percent or less of the area median income, or 40 percent of units be occupied by persons or families at 60% or less of the area median income), even if the district extends beyond the conclusion of the authority’s agreement with the developer.

Because developers typically are the source of the income requirement documentation, authorities may wish to consider the continued need for such documentation when drafting their development agreements.

Last referenced April 1, 2022 in the State Auditor's E-Update.