What Is Asset Income
Asset income is money earned from household assets, including interest from savings accounts, dividend payments from stocks or mutual funds, and net rental income. The Section 8 program counts asset income toward a family's annual income when determining eligibility and rent contribution amounts.
How Section 8 Calculates Asset Income
PHAs use two methods to count asset income, and they must use whichever method produces the higher amount. First, they can count actual income received from assets during the 12-month period. Second, they can impute income based on the family's net family assets multiplied by a passbook savings rate (currently 2% annually, though this rate can vary by PHA). If a family has $50,000 in net assets, the PHA would impute at least $1,000 in annual asset income using the second method.
Assets excluded from this calculation include retirement accounts (IRA, 401k, pension funds), amounts designated for disability expenses, and the value of the primary residence. Cars used for transportation are also typically excluded.
Practical Impact on Rent and Eligibility
Asset income directly affects tenant rent contributions. When a family's imputed asset income increases, their counted annual income increases, which raises their share of rent (typically 30% of adjusted income). For landlords, this matters because it determines the PHA's voucher payment amount and the tenant's portion. A tenant with substantial savings may face higher rent contributions than their actual earnings suggest.
Families must report asset changes to their PHA during recertification. Undisclosed assets can result in overpayment of housing assistance, which the family must repay. Landlords should understand that a tenant's income calculation includes these imputed amounts, affecting both voucher value and tenant ability to pay.
Key Details
- The passbook savings rate varies by PHA, so check your local rate rather than assuming 2%.
- PHAs use the higher of two calculations: actual income received or imputed income from net assets.
- Asset income counts toward annual income for both eligibility determination and rent calculation.
- Families with liquid assets exceeding $5,000 (amounts vary by PHA) typically see imputed asset income.
- Changes in household assets must be reported at recertification to remain program-compliant.
Common Questions
- Does a family's savings account always trigger asset income? Not automatically. Most PHAs don't count asset income on smaller balances under their threshold. However, substantial savings trigger imputed income calculated at the passbook rate, even if the account earns little actual interest.
- If a tenant receives a lump sum settlement or inheritance, how does that affect their voucher? It becomes a net family asset and is subject to imputation at the next recertification. The family should report it promptly rather than waiting, as unreported changes can create overpayment situations.
- Can a family reduce asset income by spending down savings? The program does not restrict families from spending their own money. However, intentional asset disposition to qualify for assistance or reduce rent contributions may trigger compliance issues depending on PHA policy. Families should discuss large transfers with their caseworker.