Description

This class explains the differences between the original 2016 HOTMA law and the proposed 2025 updates. Since taxation rules for low-income residents will change, the IRS must revise its guidance and processing procedures.

The Housing Opportunity Through Modernization Act (HOTMA), passed in 2016, is primarily managed by the U.S. Department of Housing and Urban Development (HUD). The new updates significantly change the original law, requiring HUD staff to create new protocols and auditing procedures.

HOTMA was designed to simplify procedures for people relying on Public Housing and Section 8 programs. Although it will eventually streamline processes, there will be a learning curve. HUD staff face challenges in assisting people without finalized regulations.

The phased-in implementation began in 2017 and will continue to accommodate the recent updates. Full implementation is now expected on January 1, 2026.

The main updates include higher asset limits and increased certification thresholds. These changes will slightly reduce HUD’s administrative workload and shorten the time residents spend having their assets verified by third parties.

Income calculations will now be based on the previous year, simplifying the process and reducing errors in calculations and decision-making.

The 2025 updates will change deductions for elderly residents and those who are physically, mentally, or emotionally disabled. Medical expense deductions will also change. The passbook rate (expected income from assets) will increase. There will be gradual relief from medical expenses, and the deduction rates for both students and minors will change.

Adoption expense deductions will also change. Foster youth will now receive consideration under the new plan up to age 24. This is similar to the Affordable Care Act (Obamacare), which allows children to stay on their parents’ health insurance until age 26 (instead of 22).

The updates also clarify income exclusions. Every existing tenant will need to sign a new HOTMA lease, but less frequently. HUD can now begin enforcing HOTMA more effectively, as the transition phase nears completion.

The class will also cover the impact of HOTMA and LIHTC updates on compliance, HUD program efficiency, and successful implementation. It will include best practices for auditing tenant eligibility, covering initiation, authorization, organization, funding, audit execution, reporting, and corrective actions.

The session will describe documentation and reporting requirements under the new rules. As with all new laws, staff must be trained on the changes and how to apply them at the micro level.

Some training will be provided by independent contractors, which means procurement staffing will temporarily increase during the learning phase.

Training will also cover the removal of the earned income disregard program.

This class will discuss the challenges and certainties landlords face when renting to public housing tenants, including income loss due to fewer potential tenants, lower rent, higher turnover costs, and decreased property equity.

The 2025 updates could reduce the number of vouchers issued, making it harder for low-income residents to pay rent and possibly leading to homelessness and employment difficulties.

The new rules are complex and can be hard to interpret, making it more challenging for HUD employees to work efficiently. This can lead to frustration and performance issues.

The changes will also affect agencies like the IRS, USDA, and state and local organizations managing Section 8 and public housing programs. These agencies, required to follow HUD’s criteria, must now create new guidance reflecting these rules.

HOTMA was passed in 2016, managed by HUD, and aimed to help low-income individuals in Public Housing and Section 8. HUD began implementing HOTMA between 2017 and 2023, and published the final rule for key sections in 2023, effective January 1, 2024. Full implementation is expected on January 1, 2026.

Learning Objectives:-

Understand Section 8 and public housing legislation
Understand the 2016 HOTMA legislation
Know what the 2025 changes are
Understand how these will affect low-income residents
Understand how these changes affect tenants with increased income
Know why these changes will affect the IRS
Know how these changes will affect the USDA

Areas Covered in the Session:-

Changes in calculation methods for tenant eligibility
Best practices for eligibility audits
Identification of new documentation requirements
Requirements for additional training for HUD staff
Requirements for subsidized HOTMA housing
Changes to income, asset, and rent limits
Removal of earned income disregard program
Extended compliance deadline
How these changes affect landlords
How these changes affect tenants
How these changes affect the IRS
How these changes affect the USDA

Why Should You Attend?

INVESTORS: Property owners who rent to Section 8 tenants could lose income due to fewer potential tenants, lower rent, and reduced property equity.
TENANTS: The 2025 updates may result in fewer vouchers, making it harder for low-income families to pay rent or mortgages.
HUD EMPLOYEES AND CONTRACTORS: The complex 2025 rules will make their jobs harder and less efficient.
OTHER FEDERAL, STATE, AND LOCAL AGENCIES: The changes will affect organizations like the IRS, USDA, Housing Trust Fund, and Housing Opportunities for Persons with AIDS.

Who will Benefit?