Plain-English definition

What is HOTMA (Housing Opportunity Through Modernization Act of 2016) ?

HOTMA, the Housing Opportunity Through Modernization Act of 2016, is a federal law that changes how HUD programs count income and assets. Sections 102 and 104 raise the medical expense threshold, add a cap on household assets, and change when a mid-year income review is required.

HUD published the final rule in February 2023, then gave each program office its own runway. Public and Indian Housing, which covers public housing and vouchers, reached full compliance on July 1, 2025 under Notice PIH 2024-38. Multifamily Housing runs later. Notice H-2025-07, published December 18, 2025, moved the Multifamily date to January 1, 2027.

That gap is the part operators get wrong. A 2026 Multifamily certification still uses pre-HOTMA rules: Handbook 4350.3 REV-1, the $480 dependent deduction, the $400 elderly or disabled deduction, and the 3% medical threshold. Owners who want the new rules early can adopt them using the TRACS rent override.

On the Multifamily compliance date the numbers move. The dependent deduction becomes an indexed figure, $500 for calendar year 2026. The elderly or disabled deduction becomes $550. The medical threshold rises from 3% to 10%, phased through 5% and 7.5% for residents who held the deduction on January 1, 2024. Medical expenses start following IRS Publication 502. HOTMA also caps household net assets at $105,574 for 2026 and lets households self-certify below the imputed income threshold of $52,787.

Layered properties are already mixed. State agencies set LIHTC adoption themselves and some moved as early as January 1, 2024. USDA Rural Development went live on July 1, 2025. So a property with Section 8, LIHTC, and Rural Development money can be running HOTMA math on one funding layer and pre-HOTMA math on another in the same year.

Example

A resident with high medical costs lives at a Section 8 and LIHTC property in 2026. The HUD layer uses the 3% medical threshold, because Multifamily has not reached its compliance date. If that state's housing agency adopted HOTMA for LIHTC in 2024, the same household is measured against the 10% threshold on the tax credit layer. Two thresholds, one household, one year.

Why HOTMA matters

HOTMA changes the inputs to every rent calculation, and the compliance dates are staggered by program office rather than shared. Applying the new figures a year early is a finding, and applying the old ones a year late is also a finding. Which set is correct depends on the funding layer and on the certification's effective date.

Related terms

Section 8Section 8 is the federal rental assistance program that pays part of a household's rent to a private owner.
LIHTCLIHTC, the Low-Income Housing Tax Credit, is a federal tax credit that pays developers to build and keep rental housing affordable.
EIVEIV, the Enterprise Income Verification system, is HUD's database of tenant employment and income data drawn from federal wage and benefit records.
TRACSTRACS, the Tenant Rental Assistance Certification System, is the HUD system that receives tenant certifications and subsidy payment requests for Multifamily housing programs.

How Fortress handles it

Sources

Last reviewed August 29, 2026. Back to the glossary