When Fair Housing and Tax Credit Rules Conflict

When Fair Housing and Tax Credit Rules Conflict



Q: My city recently passed an ordinance protecting students against housing discrimination. The community I manage, however, receives low-income housing tax credits, so I must comply with federal tax credit rules—including the “student rule.” Under this rule, I can’t rent low-income units to households comprised entirely of full-time students, except in very limited circumstances. But if I reject such applicants, could I be liable for violating fair housing law?

A: Although the federal Fair Housing Act doesn’t protect students against housing discrimination, some cities such as Madison, Wis.; Ann Arbor, Mich.; and Austin, Texas, do include student status as a protected characteristic under local antidiscrimination laws. If your community is located in such a city, you might be afraid to turn away a household comprised of full-time students, in violation of the student rule, fearing you’ll be held liable for illegal discrimination.

But if you determine that a household isn’t eligible to occupy a low-income unit because it would violate the student rule, you shouldn’t be afraid to reject the household. Because accepting the household would violate federal law, you must reject the household. The rejection won’t violate local fair housing law, because the reason for your rejection is that the household doesn’t meet the tax credit program’s eligibility requirements.

Of course, if only some of a household’s members are full-time students, or if the household falls under an exception to the student rule, you’ll violate the local fair housing law if you reject the household. Because renting to households in these situations doesn’t violate the student rule, you don’t need to reject them to comply with the tax credit law.

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