Quick Answer
Income-restricted housing in the Richmond area usually means a property financed in part through the federal Low-Income Housing Tax Credit (LIHTC) program, HOME funds, or a local affordability covenant, and it comes with rules that override an owner’s normal discretion over rent and tenant selection. If you own or manage a property with any LIHTC units, Virginia Housing (the state’s allocating and compliance agency) requires annual tenant income certification, rent caps tied to area median income (AMI), and a minimum 30-year affordability period that survives a sale of the property. Mixing LIHTC compliance with Virginia’s landlord-tenant law, including the state’s source-of-income protections for voucher holders, is where most owners make costly mistakes, so it is worth understanding the basics even if you manage only a handful of units in a mixed-income building.
What “Income-Restricted” Actually Means in the Richmond Market
Not every below-market apartment in Richmond is “income-restricted” in the legal sense. A landlord can always choose to charge less than market rent voluntarily, and that carries no compliance obligations. Income-restricted housing, by contrast, refers to units that are legally bound to income and rent limits because the property received a public subsidy or tax benefit. In the Richmond metro, the three most common vehicles a landlord or investor is likely to encounter are:
- Low-Income Housing Tax Credit (LIHTC) properties, created under Section 42 of the Internal Revenue Code, which generate a dollar-for-dollar federal tax credit for developers in exchange for renting a share of units to households below a set income threshold for at least 30 years.
- HOME Investment Partnerships Program units, funded through HUD and administered locally, which carry their own affordability periods (typically 5 to 20 years depending on the type of assistance).
- Locally negotiated affordability covenants, increasingly common in Richmond, Henrico and Chesterfield as a condition of rezoning approval or a density bonus, where a developer agrees to keep a percentage of units affordable in exchange for permission to build more units than zoning would otherwise allow.
In every case, the restriction travels with the property, not the owner. If you buy a building with existing LIHTC units, you inherit the compliance obligations attached to the extended-use agreement recorded against the property, whether or not anyone mentioned it clearly during due diligence.
How LIHTC Actually Works
Virginia Housing is the state’s designated Housing Credit Agency, responsible for allocating both 9% competitive credits and 4% credits paired with tax-exempt bonds. Developers apply for an allocation, agree to income and rent restrictions on a share of the units (often 100% of the units in a dedicated affordable property, or a smaller percentage in a mixed-income development), and in return receive a credit that offsets their federal tax liability over a 10-year period. The catch, and the part owners sometimes underestimate, is that the affordability restriction itself lasts far longer than the tax credit: 15 years of mandatory compliance, plus an extended-use period that brings the total to a minimum of 30 years in most cases. Selling the property does not end the restriction. A new owner who did not apply for the credit still has to run the property as an LIHTC property until the extended-use period expires or the agency releases it through a qualified contract or similar process.
Area Median Income and What It Means for Rent Caps
LIHTC rent and income limits are calculated off HUD’s Area Median Income figure for the metro area where the property sits, not the city alone. For the Richmond Metropolitan Statistical Area, which stretches across 17 localities including Richmond city, Henrico, Chesterfield, Hanover, Goochland, Powhatan and several counties further out, HUD set the 2025-26 AMI figure at $113,500. That regional number matters because it is noticeably higher than Richmond city’s own median household income, which was roughly $63,390 in 2024. The practical effect is that a unit restricted at “60% of AMI,” a very common LIHTC threshold, can still come out to a meaningfully higher rent ceiling than many renters in the city itself can actually afford, which is part of why affordability advocates in the region keep raising the AMI-skew issue.
Rent and income limits typically step down in tiers. Here is roughly how the tiers break down based on current published figures for the Richmond MSA:
| Income Tier | Approx. Annual Income Limit (1 person) | Approx. Max Rent (1-2 BR) |
|---|---|---|
| 80% AMI | ~$63,600 | ~$1,703 – $2,044 |
| 50% AMI | ~$39,750 | ~$1,064 – $1,277 |
| 30% AMI | ~$23,850 | ~$638 – $766 |
Owners should never calculate these figures themselves from memory. Virginia Housing publishes updated income and rent limit tables annually, and using a stale table is one of the most common compliance failures found during file audits.
What Landlords and Property Managers Must Actually Do
If you own, buy, or manage a property with LIHTC or HOME-restricted units in the Richmond area, Virginia Housing’s compliance monitoring division expects the following, at minimum:
- Initial and annual tenant income certification. Before move-in, and at least annually thereafter in most LIHTC structures, you must document and verify a household’s income using approved third-party verification methods (employer letters, benefit award letters, bank statements), not a tenant’s self-reported figure alone.
- Accurate tenant file maintenance. Property managers must keep tenant information current in Virginia Housing’s online Tenant Portal for every occupied restricted unit, and report ownership, management, or key staffing changes to the assigned compliance officer promptly, not at the next renewal cycle.
- Timely annual owner certifications and compliance fees. Tax credit properties owe annual compliance monitoring fees and must complete owner certifications and tenant event validations through Virginia Housing’s Procorem portal on a fixed annual schedule.
- Average Income Test tracking, where applicable. Since the IRS finalized the Average Income Test rule, some properties elect to serve a mix of income bands (as low as 20% AMI up to 80% AMI) as long as the average across restricted units stays at or below 60% AMI. This flexibility is attractive to developers but adds real complexity to ongoing compliance, since a single bad re-certification can throw off the whole building’s qualifying average.
- Physical condition standards. Virginia Housing conducts property inspections as part of its monitoring, separate from any local housing voucher inspection, and expects the physical condition of restricted units to meet applicable health and safety standards throughout the compliance period.
None of this is optional or something a landlord can negotiate away in a lease. Noncompliance can result in the recapture of tax credits already claimed by the owner or investor, which is a far larger financial exposure than most owners expect from what looks, on the surface, like a paperwork issue.
Fair Housing Still Applies, in Full
A common and costly misconception is that income-restricted housing somehow operates outside of fair housing law. It does not. Every protection under the Virginia Fair Housing Law and the federal Fair Housing Act still applies to LIHTC and HOME-restricted units, including the state’s source-of-income protections that took effect July 1, 2020. Those protections prohibit refusing an applicant specifically because they intend to pay part of their rent using a housing voucher or another lawful subsidy, and they require that any minimum income screening criteria be applied to the tenant’s actual out-of-pocket portion of rent rather than the full contract rent. Many LIHTC households also hold a Housing Choice Voucher layered on top of their tax credit eligibility, and an owner who tries to screen out voucher holders on an income-restricted property is exposed to both a fair housing complaint and a tax credit compliance problem at the same time. Owners who are evaluating voucher holders as applicants should also review our guide to Housing Choice Vouchers: What Richmond Landlords Should Know, and our walkthrough of how to prepare a Richmond rental for a housing voucher inspection, since the two compliance systems (LIHTC and the local housing authority) often run in parallel on the same unit.
Acquiring a Property With Existing Income Restrictions
Richmond-area investors occasionally encounter LIHTC properties coming up for sale, particularly as older allocations approach the end of their 15-year initial compliance period, which is when some owners become eligible to apply for a “qualified contract” to exit the program early. Before closing on any property where affordability restrictions might apply, an investor should:
- Request a copy of the recorded extended-use agreement and confirm the restriction’s expiration date directly with Virginia Housing, not just the seller’s representation.
- Pull current rent rolls against the current year’s published AMI rent limits to confirm the property is not already out of compliance.
- Review the last two years of Virginia Housing compliance monitoring correspondence for any outstanding findings, since unresolved findings can follow the property to a new owner.
- Budget for the annual compliance monitoring fee and the administrative cost of maintaining tenant files in the Tenant Portal, which is a real ongoing expense that reduces effective net operating income compared to a comparable market-rate property.
For owners deciding whether an income-restricted acquisition fits their broader portfolio strategy, it is worth reading alongside our overview of what happens after a fair housing complaint is filed against a Richmond landlord, since the compliance habits that protect you under LIHTC rules are largely the same habits that protect you under general fair housing law.
Frequently Asked Questions
Is LIHTC the same thing as Section 8?
No. LIHTC is a federal tax credit program that restricts rent and tenant income at a property regardless of who lives there, while Section 8 (the Housing Choice Voucher program) is tenant-based rental assistance that follows an individual household and can be used at many different properties, including market-rate ones. A single unit can be both LIHTC-restricted and occupied by a voucher holder at the same time.
Who enforces LIHTC compliance in Virginia?
Virginia Housing, the state’s housing finance and development authority, serves as the designated Housing Credit Agency responsible for allocating credits and monitoring ongoing compliance for LIHTC properties across the Commonwealth, including the Richmond metro area.
How long does the affordability restriction last?
The IRS requires a minimum 15-year compliance period, but Virginia, like most states, requires an extended-use agreement that pushes total affordability out to a minimum of 30 years in most allocations. The restriction is recorded against the property and transfers automatically to a new owner upon sale.
Can I charge an income-restricted tenant a higher rent if market rents rise?
No. Rent for a restricted unit is capped based on the applicable AMI percentage for that unit type, updated annually by Virginia Housing. Charging above the published limit, even briefly, is a compliance violation regardless of what comparable market-rate units nearby are renting for.
Do I have to accept a Housing Choice Voucher on an LIHTC unit?
You cannot refuse an applicant specifically because they plan to pay with a voucher or other lawful subsidy; Virginia’s source-of-income protections under the Virginia Fair Housing Law prohibit that outright, independent of any LIHTC rules layered on top.
What happens if I fail an income certification or let my files lapse?
Depending on severity, consequences range from a compliance finding that must be cured within a set window to, in serious or repeated cases, recapture of previously claimed tax credits by the property’s investors, which can trigger contractual indemnification claims against the owner.
Does buying a building automatically make me responsible for existing LIHTC restrictions?
Yes. The extended-use agreement is recorded against the real property itself, not against the selling entity, so a new owner inherits the remaining compliance period and all associated reporting obligations upon closing.
Are there tax benefits for a landlord who voluntarily rents below market without a formal program?
Voluntarily charging below-market rent does not generate LIHTC-style tax credits; those are only available to developers who applied for and received a formal allocation from Virginia Housing as part of a property’s original financing.
Talk to Mission Realty
Whether you are evaluating an income-restricted acquisition in the Richmond area or already manage LIHTC units and want a second set of eyes on your compliance calendar, Mission Realty Property Management works with owners across the region every day. Learn more about our full range of property management services, or visit our owners page to see how we help investors keep complex properties, including affordability-restricted ones, in compliance while still performing well financially. If you have a specific property in mind, contact our team and we will walk through it with you.
