Low-Income Housing Tax Credits (LIHTC)

Created under the Tax Reform Act of 1986, the low-income housing tax credit (LIHTC) is considered the most productive affordable housing program in the nation. IHDA administers 9% and 4% tax credits.

Program rules and guidelines

IRS regulations for the federal tax credit program are found in Section 42 of the Code of 1986, as amended. Additionally, state rules governing the LIHTC program are found in the Illinois Administrative Code, Title 47, Chapter II, Part 350.

The annual Qualified Allocation Plan (QAP) sets forth the criteria for evaluating all projects that apply for a tax credit allocation. The QAP takes effect upon the approval of the IHDA board and the governor.

Applying for LIHTC

All LIHTC applications require an approved Preliminary Project Assessment (PPA) before a Full Application can be received.

For 9% LIHTC applications, the PPA submittal dates are discussed in the program timelines. There are two 9% PPA rounds per calendar year. For projects approved either in round one or round two, the PPA approval is only valid for that calendar year.

4% LIHTC applications are valid for one year from the date of approval. PPA approvals may be rescinded due to LIHTC approvals or changes to the market or site.

4% credits

IHDA will accept applications for a determination letter for developments to be financed with the proceeds of tax-exempt bonds, whether or not IHDA is the issuer, on a rolling basis during the calendar year.

For information about requesting a 4% determination letter, please see the application for multifamily financing and program timelines.

9% credits

Preliminary Project Assessment (PPA)

Before submitting an application for LIHTC, all projects must be approved through a Preliminary Project Assessment (PPA) process. This process contains basic information regarding project concept and design, location and the proposed tenant population. The goal of the PPA is for IHDA to provide feedback, and to determine the projects that will be eligible to submit a low-income housing tax credit (LIHTC) application. An LIHTC application will not be accepted from projects not approved during the preliminary process. Program timelines apply.    

Full application

Upon PPA approval, a full application may be submitted. For information about 9% tax credits, please see application for multifamily financing and program timelines.