[MN] Will an increase in income require a tenant to move out of Section 42 housing?

Lexi, Chatbot

I understand that you're concerned about your housing situation and the potential impact of your income on your lease. Can you tell me if you have already submitted the income verification paperwork to your landlord?

Lexi, Chatbot

Have you received any specific communication from your landlord regarding your income limits or any potential actions they may take?

Lexi, Chatbot

Is there anything else the lawyer should know before I connect you? Rest assured, they'll be able to help with your housing situation.

Clay G., Esq.

Hello! I am Clay, an attorney with several years' experience, and I will be assisting you with your question today. Just a note, our conversation is for general legal information only and does not establish an attorney-client relationship.

Clay G., Esq.

How are you today? I understand you have a question about eligibility to continue living in Section 42 housing in Minnesota. Is that correct?

Clay G., Esq.

OK, thank you. Since you are in Section 42 housing (also known as the Low-Income Housing Tax Credit or LIHTC program), the rules regarding income increases are generally more tenant-friendly than other subsidized programs. In most cases, you will not be forced to move out solely because your income has increased, but there are important nuances regarding how your rent might change and how the "Available Unit Rule" applies.

The "Once Qualified, Always Qualified" Principle

Under federal IRS rules for Section 42 housing, once you have initially qualified for a unit, you are generally considered "income-qualified" for the remainder of your tenancy. Even if your income increases significantly, even beyond the initial 60% Area Median Income (AMI) limit, you are usually allowed to stay in your apartment. Unlike some other programs, there is no federal ceiling that triggers an immediate eviction based on income growth.

The 140% Rule (Available Unit Rule)

The primary regulation that kicks in when a tenant's income rises is the 140% Rule. If your household income increases to more than 140% of the current income limit for your family size, your unit is technically no longer considered a "low-income unit" for the landlord's tax credit purposes. However, this does not mean you must leave. Instead, the landlord must rent the next available unit of comparable or smaller size in the building to a qualified low-income household. Once that next unit is rented to a low-income tenant, your unit can technically be converted to market rate, though many Section 42 properties choose to keep the rent restricted as long as you remain in the unit. (26 CFR § 1.42-15)

Income Limits in Minnesota (2026)

Income limits vary significantly by county and household size. As of 2026, for a one-person household in the Minneapolis-St. Paul-Bloomington metro area, the 60% AMI limit is approximately $55,620.

Initial Limit: ~$55,620
140% Threshold: ~$77,868

Since your income is $64,066, you appear to be above the initial 60% qualifying limit but well below the 140% threshold that would change the status of your unit. Because you have already signed your new lease and it is in effect as of June 1st, the landlord generally cannot terminate it simply because you received a disability increase, provided you were honest about your income at the time of your last certification.

Summary of Your Situation

You should not have to move out. The landlord is likely asking for paperwork because they are required by the IRS to perform an annual recertification to track the building's compliance. While they must document your $64,066 income, this increase typically does not result in an eviction notice or a requirement to vacate.

Clay G., Esq.

Having not heard from you in more than 12 hours, I take it you are satisfied with the answer I have provided. It was my pleasure to assist you. Please let me know in this thread if you have any follow-up questions to clarify the answer I have provided. Thank you for using our service, and have a great day!