The Next Available Unit Rule: What to Do When a Household Goes Over-Income

Erica Davis
13 minutes ago
4 min read

When a household in a LIHTC unit goes over-income at recertification, the next steps are critical. The Available Unit Rule applies specifically to LIHTC and does not require the household to move—but it does require immediate action to maintain compliance. Here’s exactly what to do when the rule is triggered.

📌 Introduction

The Next Available Unit Rule (AUR) applies specifically to LIHTC properties and comes into play when a household’s income exceeds program limits at recertification.

At that point, the household does not have to move—but your compliance responsibilities shift immediately.

👉🏾 This rule is unique to LIHTC and should not be applied to other programs unless specifically required

👉🏾 This is where many properties get it wrong

👉🏾 And where small missteps can turn into building-wide findings

AUR is not just a rule to understand—it’s a process your team must execute correctly.

📊 What Triggers the Rule?

The AUR is triggered when a household’s income exceeds 140% of the applicable income limit at annual recertification.

Example:

Unit designated at 60% AMI
Income limit: $45,000
140% threshold: $63,000

👉🏾 Household income at recert: $64,000 → AUR is triggered

👉🏾 The household can remain—but compliance action is required

📌 What If the Property Is Not 100% LIHTC?

Many LIHTC properties include both low-income and market-rate units.

👉🏾 The Available Unit Rule still applies—but only to the low-income units included in the building’s applicable fraction

Here’s what that means:

The rule is triggered when a LIHTC-qualified household becomes over-income
The requirement applies to the next available comparable low-income unit within the same building
Market-rate units are not used to satisfy the Available Unit Rule

👉🏾 You cannot bypass the rule by leasing available units as market if a comparable low-income unit should be filled by a qualified household

👉🏾 The goal is to maintain the building’s required number of low-income units

📊 Example Scenario

A building contains both LIHTC and market-rate units.

A household in a LIHTC unit goes over-income and triggers the AUR
A comparable LIHTC unit becomes available—but is leased to a market-rate household instead

👉🏾 The Available Unit Rule has not been satisfied

👉🏾 The over-income LIHTC unit is now considered out of compliance

👉🏾 This may trigger an 8823 and potential credit risk

👉🏾 The presence of market units does not remove or reduce the requirement to lease available LIHTC units correctly

📊 Income Averaging: Where It Gets Specific

For Income Averaging (IA) properties:

👉🏾 The 140% threshold is based on the unit’s AMI designation—not the property overall.

AMI Tier	Income Limit	140% Threshold
30%	$22,500	$31,500
40%	$30,000	$42,000
50%	$37,500	$52,500
60%	$45,000	$63,000
70%	$52,500	$73,500
80%	$60,000	$84,000

👉🏾 The same household income may trigger AUR in one unit—but not another

👉🏾 Always evaluate against the specific unit designation

📌 Step-by-Step: What to Do Next

🧾 Step 1: Complete the Recertification

Process the recertification as normal
Calculate income using current HOTMA methodology
Document that the household exceeds the 140% threshold

👉🏾 The file must clearly support the over-income determination

💰 Step 2: Adjust Rent (If Applicable)

The household must pay at least the restricted rent for the unit
Some programs may allow market rent—confirm with your state guidance

👉🏾 The household should not continue paying a rent below what is required

🚩 Step 3: Flag the Unit

Identify the unit as over-income / AUR active
Track the trigger date

👉🏾 This step is critical for monitoring and compliance tracking

🏢 Step 4: Rent the Next Available Comparable Unit

When the next unit becomes available:

It must be in the same building
It must be comparable or smaller
It must be rented to a qualified household

👉🏾 This is the most critical step in maintaining compliance

👉🏾 Leasing decisions must align with AUR requirements

🔄 Step 5: Restore Compliance

Once a qualified household occupies the next available unit:
👉🏾 Compliance is restored
👉🏾 The over-income household may remain

👉🏾 Remove the AUR flag once resolved

📌 What “Next Available” Really Means

This is where confusion often happens:

Same building—not across the entire property
Comparable or smaller—not larger units
Truly available—not just on notice
Filled within a reasonable timeframe

👉🏾 You cannot bypass this requirement without creating noncompliance

⚠️ What Happens If You Get It Wrong?

If the next available unit is not rented correctly:

The over-income unit becomes out of compliance
This can lead to building-wide noncompliance
An 8823 may be issued
Tax credits may be at risk

👉🏾 This is one of the few compliance areas where one mistake can impact an entire building

📊 HOTMA Considerations

HOTMA affects how income is calculated—which impacts AUR triggers.

Updated income rules may change who exceeds 140%
The $50K asset threshold reduces imputed income
Some households may no longer trigger AUR under updated calculations

👉🏾 Review existing AUR flags to ensure they are still valid

👉🏾 While HOTMA impacts income calculations across multiple programs, the Available Unit Rule itself applies only to LIHTC

📂 Tracking the AUR: Best Practices

Maintain an AUR tracking log
Flag units in your compliance system
Monitor upcoming vacancies
Train leasing staff on AUR requirements
Document leasing efforts and decisions

👉🏾 Documentation is your protection during audits and reviews

⚠️ Common Compliance Mistakes

❌ Using the wrong AMI threshold

❌ Forgetting the rule is building-specific

❌ Renting the next unit to a non-qualified household

❌ Not tracking AUR status

❌ Delaying action after the trigger

👉🏾 Most AUR issues come down to missed timing—not misunderstanding the rule

🎯 The Bottom Line

The Available Unit Rule follows a clear sequence:

👉🏾 Household becomes over-income

👉🏾 Unit is flagged

👉🏾 Next available unit is rented correctly

👉🏾 Compliance is restored

The complexity comes from applying the rule correctly—especially with Income Averaging.

👉🏾 Act quickly

👉🏾 Stay organized

👉🏾 And ensure every step is documented

💼🏾 Need help with AUR tracking or Income Averaging compliance? The TCC Firm supports site and compliance teams with monitoring, training, and file reviews across LIHTC, Section 8, HOME, and Rural Development programs.

👉🏾 Contact us to get started!