Example – Asset Disposed of for Less Than Fair Market Value
HUD Handbook 4350.3 REV-1 — Occupancy Requirements of Subsidized Multifamily Housing Programs · 2026 edition · updated 2026-10-05 · United States
Margot Lundberg’s recertification will be effective January 1. On that date, it will be 18 months since she sold her house to her daughter for $60,000 less than its value. The owner will count income on the $60,000 for only six months. (After six months, the two-year limit on assets disposed of for less than fair market value will have expired.)
d. Assets disposed of for less than fair market value as a result of foreclosure, bankruptcy, divorces, or separation, are not counted.
e. Assets placed in nonrevocable trusts are considered as assets disposed of for less than fair market value except when the assets placed in trust were received through settlements or judgments.
f. Applicants and tenants must sign a self-verification form at their initial certification and each annual recertification identifying all assets that have been disposed of for less than fair market value or certifying that no assets have been disposed of for less than fair market value.
g. Owners need to verify the tenant self certification only if the information does not appear to agree with other information reported by the tenant/applicant.
HUD Occupancy Handbook Chapter 5: Determining Income & Calculating Rent
6/07
5-39
Section 2: Determining Adjusted Income
4350.3 REV-1
| Examples – Asset Disposed of for Less Than Market Value | |
|---|---|
| (1) | An applicant sold her home to her daughter for $10,000. The home was |
| valued at $89,000 and had no loans secured against it. Broker fees and | |
| settlement costs are estimated at $1,800. | |
| $89,000 Market value |
|
| -1,800 Fees |
|
| $87,200 Cash value |
|
| -10,000 Sales price to daughter |
|
| $77,200 Asset disposed of for less than fair market value |
|
| In this example, the asset disposed of for less than fair market value is | |
| $77,200. That amount is counted as the resident’s asset for two years from | |
| the date the sale took place. | |
| (The $10,000 received from the daughter may currently be in a savings | |
| account or other asset or may have been spent. The $10,000 will be | |
| counted as an asset if the applicant has not spent the money.) | |
| (2) | A resident contributed $10,000 to her grandson’s college tuition and gave her |
| two granddaughters $4,000 each to save for college. | |
| $10,000 College tuition gift |
|
| + 8,000 Gift to granddaughters |
|
| $18,000 Asset disposed of for less than fair market value |
|
| The $18,000 disposed of for less than fair market value is counted as the | |
| tenant’s asset for two years from the date each asset was given away. |
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