Two units in the same building. Same bedroom count, same floor, both occupied by qualified households.

One has HUD project-based rental assistance (PBRA). The other does not. From 1 January 2027, those two households may need to be certified under different income requirements, with different asset and verification rules, in the same file room, by the same person.

That is the practical shape of HOTMA for a layered property, and the deadline is about three months away.

What The Split Looks Like On A File

Take a household with $28,000 of employment income and $47,000 in a savings account, applying for either unit.

On the PBRA unit, beginning 1 January 2027, the file is worked under the HOTMA requirements at 24 CFR part 5. The household's $47,000 in savings is below the applicable inflation-adjusted threshold, so income is generally not imputed from those assets. Any actual income earned from the account is still treated under the applicable HOTMA income rules. If the owner has adopted HUD's permitted asset self-certification policy, the verification process can also be lighter for assets below the threshold.

On the LIHTC-only unit, the file is worked under Section 42 and the allocating agency's applicable guidance. Because, as of August 2026, the IRS had not issued specific guidance addressing the HOTMA final-rule provisions for LIHTC, state agencies have had to address the interaction in their own compliance guidance. The treatment and effective date therefore need to be checked against the applicable agency's current position.

So the same household, the same savings account, and potentially two different answers on whether asset income is imputed and what has to be verified.

That is not a hypothetical drafting problem. It is two files in the same cabinet, prepared by the same person, in the same week.

The Date, And What Moved It

HUD's HOTMA Final Rule changed how income and assets are calculated across HUD programs, and the compliance date has been extended more than once.

Notice H 2025-07, issued 17 December 2025, extended the required date for full compliance with the HOTMA Final Rule and HUD's revised income and asset documentation standards for income certifications from 1 January 2026 to 1 January 2027. It supersedes Notice H 2025-03, which had set the earlier date.

Two things follow from that.

1. Any training material or guidance carrying an earlier date has been superseded:
   HUD says so directly on its own page. If your compliance binder was assembled around an earlier deadline, the dates in it are wrong.

2. Early adoption is possible but awkward:
   Owners and agents wishing to adopt HOTMA before 1 January 2027 may calculate family incomes and tenant rents manually, then enter the resulting information into TRACS 202D using the rent override function. That is a manual calculation and rent override workflow rather than the normal post-implementation system path, and it is worth knowing before anyone decides to move early.

Why The Split Exists

In layered projects, the governing income requirements can be unit-specific. Units with HUD Multifamily PBRA are subject to the applicable HOTMA requirements under 24 CFR part 5, while LIHTC-only units remain subject to Section 42 and applicable state agency guidance. That distinction follows from the requirements of the applicable programs rather than from a single rule creating a "two-rulebook" structure.

Which means a single property can run different certification standards at once, depending on the program structure and the assistance attached to the unit.

The consequences are administrative and they compound.

Different forms or workflows. The verification requirements, asset rules and income exclusions can differ between the applicable paths.

Different training requirements. A leasing agent who learns one standard and applies it to the other unit type can produce a file that fails on review.

And two explanations. When a monitoring agency asks why this file was treated differently from that one, the answer has to be documented at the time, not reconstructed.

This is the single most important thing to establish before January: which units in your portfolio are on which path, and whether anyone has written that down.

What HOTMA Actually Changes

The substantive changes matter less than the split above, but they change the arithmetic.

The asset threshold. HOTMA establishes a $50,000 base threshold for the treatment of net family assets, subject to annual inflation adjustment. The applicable dollar amount therefore changes over time. Use HUD's current inflation-adjusted figure for the certification year rather than the $50,000 base amount.

An asset ceiling. HOTMA also establishes a net family asset limitation, subject to specified exceptions, that can affect eligibility for certain HUD-assisted units, including applicable HUD Multifamily programs. The limitation is inflation-adjusted, so confirm the current figure and applicable exceptions in HUD's guidance rather than relying on a number quoted in a summary.

Interim reexaminations. HUD revised its HOTMA interim-reexamination guidance in 2026 through Notice H 2026-05. The applicable requirements should be checked against current HUD guidance rather than relying on the earlier 10% threshold.

Income exclusions. Annual income includes all amounts received unless specifically excluded under 24 CFR §5.609(b). The exclusions include foster-care payments, certain disability-related assistance, certain distributions from trusts and certain veterans' aid payments.

Nonrecurring income. The definition replaces the prior concept of sporadic income. Nonrecurring income that will not be repeated in the next 12 months from the effective date of certification is excluded from annual income.

And the figures move annually. Inflation adjustments to the limits, restrictions and deduction amounts are published each year, so the applicable figures for a certification depend on the year in which it is performed.

The Gap Nobody Can Close For You

Here is the uncomfortable part, and it is the reason the LIHTC interaction remains unsettled rather than merely complicated.

As of August 2026, the IRS had not released LIHTC-specific guidance on the HOTMA final rule provisions.

California's tax credit allocation committee said so plainly in an August 2026 memorandum: as of that date the IRS had not released specific guidance for the HOTMA final rule provisions, and in the absence of guidance, the committee reviewed the legislation itself and determined which sections it considered applicable to the LIHTC program.

That was the position at that date. Check whether the IRS has issued guidance since before relying on it.

Read what it means for a multi-state operator.

• State agencies are addressing the issue through their own LIHTC guidance, and those positions may not be identical One state's allocating agency may reach a different view from another's on which provisions apply and from when.

• So "what does HOTMA mean for LIHTC?" may have a state-specific operational answer until the IRS provides specific LIHTC guidance, and the answer you need is in your allocating agency's current compliance manual rather than in any national summary.

• Which makes one task unavoidable. For every state you operate in, find the agency's most recent HOTMA guidance, note its date, and record which position it takes. That document should form part of the compliance record for the project, and it may change.

The Recertification Relief, And Its Limits

Separately from HOTMA, there is a longstanding relief that operators routinely over-apply.

Under the federal LIHTC rules, 100% low-income projects generally have relief from annual income recertification after the initial certification. State agencies may impose additional requirements.

Four limits on that.

1. It does not apply to the initial certification:
   The initial income certification remains subject to the applicable LIHTC verification requirements.

2. Student status is separate from the income relief:
   LIHTC student-status requirements continue to apply, including any annual verification required by the applicable compliance rules.

3. Multiple-building projects require a closer look:
   Review how the buildings are treated for LIHTC purposes, including the applicable Form 8609 information and current state agency guidance, before concluding that annual recertification relief applies across the project.

4. And the state agency may require more:
   Many agencies still require an annual self-certification of income even where the federal recertification requirement is relieved. Check the current manual rather than assuming.

What To Do Before January

Working backwards from 1 January 2027.

• Map the units. Which units have HUD assistance and which do not. This is the split that determines everything downstream and needs to be documented explicitly.

• Pull your state agency's current HOTMA guidance, for every state you operate in, and note the date on each. Where applicable guidance differs, document the difference and make sure the certification process reflects the requirements applicable to that project.

• Review the Form 8609 information for any multiple-building project, together with the applicable project structure and current agency guidance, before determining whether recertification relief applies.

• Decide your asset self-certification policy for the HUD side, because whether you adopt it will affect the verification workload beginning 1 January 2027.

• Establish which forms you will use for each path, and whether your software supports both. If you are adopting early, understand that the TRACS route involves manual calculation and the rent override function.

• Train to the split, not to the change. The failure mode is not that someone learns HOTMA incorrectly. It is that someone learns HOTMA and applies it to a LIHTC-only unit that is still on the Section 42 path.

• And date everything. Which standard was applied, to which unit, under which guidance, on what date. In an area where the federal position is still developing and state positions differ, the contemporaneous record of why a file was treated the way it was is the difference between an explainable file and a finding.

The Cost Of Getting The Split Wrong

Worth stating plainly, because this is an administrative risk with a financial consequence.

A certification performed under the wrong standard is not a formatting error. It is a file that may not support the qualification of the household, on a unit that may be generating credits.

Certification errors can become monitoring findings. Math, missing signatures, stale verifications. In a layered property, the applicable requirements may also differ depending on the program structure and assistance attached to the unit.

The practical test is whether, by December, the operator can identify which requirements apply to each unit and show why the file was handled that way. That means having the verification requirements attached to the unit rather than held in someone's head.

FAQ

1. When is the HOTMA compliance deadline?
HUD Notice H 2025-07 extended the required date for full compliance with the HOTMA Final Rule and HUD's revised income and asset documentation standards for income certifications to 1 January 2027.

2. Does HOTMA apply to LIHTC?
As of August 2026, the IRS had not released LIHTC-specific guidance on the HOTMA final rule provisions. State allocating agencies have issued their own positions in the meantime, and those positions may differ. Check whether the IRS has issued guidance since, and consult your agency's current compliance manual.

3. Can two units in the same building be certified differently?
In layered projects the governing income requirements can be unit-specific, with units carrying HUD Multifamily PBRA subject to the applicable HOTMA requirements and LIHTC-only units subject to Section 42 and state agency guidance.

4. What is the new asset threshold?
HOTMA establishes a $50,000 base threshold for the treatment of net family assets, subject to annual inflation adjustment, so use HUD's current figure for the certification year. HOTMA also establishes a net family asset limitation, subject to specified exceptions, that can affect eligibility for certain HUD-assisted units.

5. When is an interim reexamination required?
HUD revised its HOTMA interim-reexamination guidance in 2026. Use the current HUD guidance applicable to the program rather than relying on the earlier 10% threshold.

This article describes general concepts and is not accounting, tax or legal advice. Confirm your position with the agency that has jurisdiction over the building and with a qualified compliance professional before changing any certification process.