Gross rent for a rent-restricted unit includes the applicable utility allowance where the tenant pays a utility directly

lihtc.ua.gross_rent_includes_applicable_allowance · v1.0.0

Where the cost of any utility for a residential rental unit is paid directly by the tenant rather than by or through the owner, the gross rent for that unit against which the section 42(g)(2) rent limit is tested includes the applicable utility allowance determined under 26 CFR 1.42-10. Telephone, cable television and Internet are excluded from that computation, so an allowance is neither required nor permitted for them. A cost paid under an actual-consumption submetering arrangement within the meaning of 1.42-10(e)(1) is treated as paid directly by the tenant even though the money passes through the owner. The consequence is that the maximum rent the owner may collect from the tenant is the gross rent limit MINUS the allowance, not the gross rent limit itself.

Confidence

high

Effective from

2008-07-29

Last reviewed

2026-08-31