Don't Let Airbnb-Style Sublets Jeopardize Your Tax Credits

As Internet-based apartment-sharing services such as Airbnb have become more popular, households may seek to rent out their unit to strangers for short stays to supplement their income. Although many owners and managers of conventional sites allow this practice, letting low-income households sublet units at a tax credit site could lead to noncompliance.

The tax credit law requires you to certify the income of all households that occupy your low-income units. But if a qualified, low-income household sublets its unit, you’ll have a situation where the unit’s actual occupants were never certified. As a result, your state housing agency may cite you for noncompliance. And if you don’t correct the problem, the owner’s tax credits may be at risk.

For steps you can take to prevent households from subletting, as well as a Model Lease Clause banning sublets, and steps to take if you discover that a household has been subletting its unit illegally, see “How to Prevent or End Sublets that Endanger Tax Credits,” available to subscribers here.