When a household disposes of an asset for less than fair market value—such as selling a home to a relative below market or donating cash—HUD rules [HUD Handbook 4350.3, Rev-1, Paragraph 5-7(G)(8)] require that the disposed value remain on the Form 50059 for two years following the date of asset disposition (not from the certification effective date).

This rule ensures that assets are properly tracked and prevents households from artificially reducing their reported resources to qualify for assistance.

Example: Applying the Two-Year Rule

Your resident reports the sale of her house to her son who resides elsewhere. Although the house was worth $500,000 on the open market, she sold it to her son for $200,000 on Oct. 10, 2025. The remaining balance on the mortgage was $75,000, and closing costs (in converting the asset to cash) were $30,000.

Calculation of Asset’s Disposed Value

Let’s first calculate the disposed value of this asset:

Under HUD pre-HOTMA rules, since the disposed value exceeds $1,000 (i.e., $1,001 or more) and the house was not disposed due to foreclosure, bankruptcy, divorce, or separation, the $195,000 value must be included on any certifications that fall within the two-year period from the date of disposition.

Under HUD post-HOTMA rules, the $1,000 threshold has been eliminated. All assets disposed of for less than fair market value within two years of the certification effective date must be reported, regardless of amount. Dispositions due to foreclosure or bankruptcy remain excluded, while divorce or separation settlements are excluded only when the household receives consideration not measurable in dollar terms [24 CFR §5.603(b)].

Determination of Two-Year Period

To determine the two-year period, count two full years from the date of disposition. For example:

Date of Disposition        10/10/25

Two-Year Period:           10/10/25 to 10/9/27

From there, you can determine which certifications will reflect the disposed asset and the earliest the asset can be removed with an interim recertification.

Which Certifications the Disposed Asset Will Affect

Let’s assume that you are conducting a Jan. 1, 2026, annual recertification for your resident:

To determine which certifications must reflect the disposed asset, include it on any certification effective within that two-year period (10/10/25 to 10/9/27).

Since the asset was disposed on Oct. 10, 2025, the disposed asset will report on the 1/1/26 and 1/1/27 annual recertifications, both of which occur within the two-year reporting period.

Removal of the Disposed Asset

The disposed asset may be removed with an interim recertification after the two-year period expires. In this case, because the two-year period ends on Oct. 9, 2027, the earliest date the disposed asset can be removed through an interim recertification is Nov. 1, 2027.

In the absence of an interim recertification, the disposed asset must be removed with the next annual recertification following the expiration of the two-year period. In this case, the disposed asset must be removed with the Jan. 1, 2028, annual recertification. Most HUD-compliant site software will remove the disposed asset automatically once the two-year period expires.

Note: The two-year rule applies even if the asset was disposed of before the household’s admission to the property. If the two-year period is still active at the time of move-in, the disposed asset must be included on the move-in certification and on any subsequent certifications that fall within the remaining portion of the two-year period.

Always remember: the two-year clock starts on the date of disposition, not the certification date. While most software will remove the disposed asset automatically once the two-year period expires, staff should confirm that the asset has been properly removed and be prepared to explain the change to residents when it occurs.

Daniel Bagliore is a freelance writer with more than 25 years of affordable housing experience.