Student Eligibility Rules at LIHTC Apartments
IRS Section 42 restricts full-time students at LIHTC apartments. The rule, single-parent and married-student exceptions, and what to verify first.
Why This Rule Exists
LIHTC (Low-Income Housing Tax Credit) apartments are financed under IRS Section 42. Section 42 includes a rule intended to prevent LIHTC units from being used as de facto student housing (which has its own funding streams). The rule: a unit occupied entirely by full-time students is not eligible for LIHTC treatment, unless a specific exception applies.
The Basic Test
The compliance office asks: is every adult in this household a full-time student?
- No = household is fine, rule doesn’t disqualify
- Yes = check whether an exception applies
The Common Exceptions
If everyone in the household is a full-time student, the household may still qualify if any of these apply:
- Single parent with a dependent child, and neither the parent nor the dependent is a dependent of another individual (other than a parent of the child).
- Married household where both spouses are entitled to file a joint tax return.
- Former foster youth (member of the household received foster care under state law).
- Job Training program participant (federal or state training program covered by the exception).
- TANF recipient household (receives assistance under Title IV of the Social Security Act).
What “Full-Time Student” Means
Defined by the school, not by the compliance office. Standard undergraduate full-time is generally 12+ credit hours; graduate schools set their own. High school students are typically counted as full-time.
Being full-time for even five months of the calendar year (they don’t have to be consecutive) triggers the rule.
What to Verify Before You Apply
If your household is student-heavy:
- Confirm each adult’s full-time or part-time status with the school registrar
- Determine if an exception applies (single parent, married, former foster, TANF, job training)
- Bring documentation of any exception (school records, court orders for foster care, marriage certificate, TANF letter)
- Ask the leasing office up front whether they’ve handled the exception before
Some communities are more comfortable with student-exception cases than others, especially in university-adjacent metros like Austin.
When the Student Rule Isn’t a Problem
- If you’re a working adult who also takes a couple of classes, you’re not “full-time”
- If your household includes a non-student (partner, parent, adult child not in school), the rule doesn’t apply
- If you’re in a job-training or workforce program that qualifies
What We Do
At intake, tell us if any adult in your household is a full-time student. We’ll:
- Check whether the student rule applies to your household
- Identify any exceptions that fit
- Prep the documentation packet
- Match you to communities experienced with student-exception cases
