The LIHTC Available Unit Rule, Explained Without the Jargon

The Available Unit Rule, or AUR, is Section 42's way of saying that a Housing Credit property cannot quietly drift toward market-rate just because households grow into more income. It is also the rule that catches more LIHTC owners off guard than any other.

The rule in one sentence

When a household in a LIHTC unit recertifies above 140% of the applicable income limit (170% in deep targeting set-asides), the next available comparable unit in the building must be rented to a LIHTC-qualified household at LIHTC-restricted rent.

When the clock starts

The clock starts on the date the recertification is signed showing income above 140%. That household keeps its unit and keeps its LIHTC-restricted rent, it is not evicted. But the building now has an obligation: the next time a comparable unit turns over, it must go to a qualified household.

What counts as a comparable unit

A comparable unit is one that is at least as large as the over-income unit, of the same bedroom count, in the same building. Not the same property, the same building. That distinction trips up portfolios with multi-building projects.

Where AUR violations actually happen

AUR violations almost never happen because somebody intentionally rented a unit to the wrong household. They happen because:

• The over-income recertification was filed and nobody flagged the AUR trigger
• The next comparable unit turned over and leasing did not know it was AUR-tagged
• The unit was offered at market rent before compliance had a chance to intervene
• Multiple over-income households accumulated and the AUR queue was lost

Every one of these is a coordination problem between compliance and leasing. The rule itself is straightforward. The information flow is what fails.

HOTMA and the AUR

HOTMA does not change the AUR itself, but it changes how income is calculated, which means more (or fewer) households may end up over the 140% threshold than they would have under the prior rules. Re-run your AUR exposure once HOTMA takes effect for your portfolio, the queue may look different.

How to stay clean

Three operational rules will keep your portfolio out of AUR trouble:

1. The AUR trigger fires automatically the moment a recertification crosses 140%
2. Every comparable unit in the same building is tagged in your leasing system, not just compliance
3. Leasing cannot accept an application on an AUR-tagged unit without compliance sign-off

When all three are in place, the AUR stops being a category on Form 8823 and starts being a normal operating control.