Most landlords will verify your income when you apply for an apartment, but for tax credit properties, income verification is required by law. Typically, income counted for rental purposes includes your regular payments for employment and may include income generated by investments or other assets. Generally, assets themselves are not considered for income verification. A landlord may also check your credit before approving your application.
How Landlords Verify Income
While some landlords check for employment or income very informally—such as by simply asking where you work and what you do—others may ask for written proof of your employment and/or income. If you have an employer (you are not self-employed), a landlord may ask to see a few months' worth of pay stubs. Alternatively, you may be asked to show your most recent W-2 document as proof of your last year's total income. If you are self-employed, a landlord may request bank statements showing recent deposits to your account. However, since self-employed people often have irregular income, it is usually easiest to verify annual income via tax returns.
What Is a Tax Credit Property?
A tax credit property is also known as a tax credit site or a tax credit building. This is an apartment complex owned by a landlord who participates in the federal low-income housing tax credit program. These landlords get to claim tax credits for eligible buildings in return for renting some or all of the apartments to low-income tenants at a restricted rent.
Verifying Income for a Tax Credit Property
If you are planning to live in a tax credit property you will need to fulfill certain criteria for incomes. As an adult applicant or household member, you should expect a landlord to ask you to sign a consent form authorizing the collection of information, including contacting third parties, to verify your income. Note that if you choose not to sign the consent form, the landlord won't be able to consider you for a low-income apartment. Also, you and any children at least six years old who will live with you in your apartment must either provide a Social Security number or a certification that you never received one.
Landlords must use verification methods that are acceptable to the U.S. Department of Housing and Urban Development (HUD). They are also responsible for determining if the verification documentation they receive is adequate and credible. HUD accepts these three methods of verification (in order of acceptability): third-party verification, review of documents, and household certification. If the first option (third-party verification) isn't available, landlords must document the reason in your tenant file before pursuing any less acceptable forms of verification.
- Third-party verification: HUD's preferred method for landlords to get third-party verification is written documentation sent directly by the third-party source, through the mail or over the Internet. Landlords are required to deal directly with third-party sources (to avoid document tampering), so don't be surprised if a landlord rejects your offer to hand-deliver a verification document form.
- Oral verification: Landlords may also verify information orally, by talking with third-party sources over the phone. Although not as reliable as written documentation, it may be necessary if third parties don't respond to written verification requests.
- Review of documents: If third-party verification isn't possible, landlords may review documents (for example, a series of pay stubs when employers refuse to respond to a landlord's employment verification request).
- Household certification: As a last resort, a landlord who cannot get proper verification may rely on a household's sworn, notarized statement (or affidavit) stating the amount and type of income at issue.