The ADU Grant is Taxable as Income

Dec 21, 2022 at 7:00am
The ADU Grant is Taxable as Income

As the year draws to a close, we want to discuss a principal concern regarding taxes when you accept CalHFA’s ADU $40 000 Grant. Most recipients of the CalHFA grant are unaware that it, like many other California grants, is viewed by the Internal Revenue Service (IRS) as income received and, therefore, is taxable.

The CalHFA Guidelines on the Grant

As detailed under CalHFA’s guidelines, applicants who receive/accept the Grant must include the grant funds as taxable income. This will be completed through a 1099 G Tax form, which the IRS requires for disbursements in the calendar year the Grant was accepted. Therefore, all the 2022 CalHFA ADU GRANT recipients will receive a 1099 in January 2023 for $40,000.00. The 1099 cannot be deferred, even if the Grant recipient decides to use the funds in 2023.

We recommend discussing this with a tax consultant, ideally before accepting the Grant, to determine how it will impact your financial situation.

On that note, HPP Cares wishes you Happy Holidays as a homeowner and hopes that this year has brought good fortune.

For additional information on this topic, refer to: or for any further information on the ADU Grant. All information concerning this post was derived from the ADU Term Sheet.

Article compiled by: Damian J. Hernandez (He/Him/His) - Director of Public Policy and Advocacy

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As a social enterprise, HPP CARES CDE has achieved significant and wide-ranging accomplishments in recent years. Working under the National Coalition for Equities' (NCFE) umbrella, our focus has been on advocating for a strong community voice among federal and state regulators and major private sector corporations. We've dedicated ourselves to addressing public policy issues, particularly those related to wealth and income inequality impacting affordable homeownership and small business growth.

Through collaborative efforts with NCFE, HPP CARES CDE has expanded outreach initiatives, leading to increased corporate social responsibility and consumer protection awareness. Our endeavors have enabled us to engage with a broader audience, forge partnerships with numerous companies, and engage with regulators, all with the goal of supporting deserving individuals in achieving sustainable homeownership, fostering successful small businesses, protecting consumers, and empowering California communities.

At HPP CARES CDE, we are committed to championing opportunities for people of color to become integral partners in our mission to reduce income and wealth inequality, thereby contributing to the creation of stronger futures for all minority groups.