section 42 housing

I’m one of those people that seriously lucked into my current apartment at just the right time. There was an opening and I was looking, so it was obviously a match made in heaven. I’m in a very hot neighborhood in my neck of the woods and owning and renting here is easily $1000+ per month – but not for me. That’s all thanks to a little thing known as Section 42 housing, making great housing available at affordable monthly rents.

What is Section 42 housing?

Essentially, the Section 42 tax credit is  an affordable rental housing program that can have several different titles. It’s also commonly referred to as a “housing tax credit program” or “low-income housing tax credit.” Under this federal tax code, this program allows builders and developers who provide affordable housing to receive a federal tax credit. In order to receive the credit, the developers agree to maintain properties in a safe and decent condition, plus maintain income and rent restrictions while they are receiving the credit.

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Section 8 vs. Section 42 housing

While there are certain eligibility requirements that must be met for both programs, the programs are definitely different. Section 42 properties have rents that are capped at a fixed amount and includes utilities that are the resident’s responsibility. Whereas in Section 8 properties the rent is based on whatever 30% of the tenant’s income is and whatever is left is funded by the federal government. Section 42 isn’t subsidized by the government.

Am I eligible for this?

That depends on your location, as the income restrictions vary by each city. The Department of Housing and Urban Development in each state determine the maximum income allowed for each county, city, and major metropolitan areas.

After submitting income information, you will have to provide a plethora of information about your assets. We’re talking about any combination of the following: checking accounts, savings accounts, retirement accounts, and basically any type of bank account you can have. They want to know about every asset you may possibly have access to. They’ll even ask about any inheritance or trust fund money, alimony, scholarships, cash you have on hand, and they’ll want to receive verification from your employers about how much you make. Be prepared to fill out a lot of paperwork up front and every year after that you wish to renew your lease.

Keep in mind that different properties under the program may have different expectations depending on specific terms and agreements between the landlord and the U.S. Department of Housing and Urban Development (HUD).

Benefits of living in a section 42 property:

In my experience, the benefits have been wonderful. Here are some of my favorite parts of my Section 42 property:

  • Location. This property, and several other Section 42 properties in my city, are centered in downtown areas. That said, most of the locations are safe and close to many places of employment. I can  walk to both of my jobs.
  • Maintenance. These buildings have to  have high maintenance standards so that the owners can keep their tax credit. That often means you have people coming in to check things more than the usual (with warning, obviously), and appliances and wear & tear matter here! The tiles in my bathroom and kitchen receive bi-annual maintenance and I always have working fire extinguishers, fire alarms and carbon monoxide alarms.
  • Utility Costs. These are often included in Section 42 rentals. I do not pay for trash, recycling or water. Parking is even covered here. The only two bills I pay are internet, by choice, and electricity, which rarely tops $50 monthly because my building was recently built (within 5 years).

Looking for an affordable apartment can sometimes be stressful, but don’t hesitate to dig into tax credit options to find what you’re looking for. If you think you will qualify, consider looking around your community for a Section 42 property that might fit your needs.

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About The Author

Kelsee is an Indianapolis based creative professional - singer, actress, director, writer, teacher, and all that jazz. She writes about all things Indy, theatre, arts, personal finance, food, politics, free, and everyday life. Keep up with her shenanigans on her blog.

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