Low Income Housing Tax Credit

Hope Manor I (Chicago)

Hope Manor (Chicago)

 

The Low Income Housing Tax Credit (LIHTC, Housing Credit) is a dollar-for-dollar federal tax credit for affordable housing investments. It was created under the Tax Reform Act of 1986 and gives incentives for the utilization of private equity in the development of affordable housing aimed at low-income Americans. The program is administered at the state level by state housing finance agencies (i.e. IHDA) with each state getting a fixed allocation of credits based on its population. IHDA evaluates applications against our “Qualified Allocation Plan” (QAP).

LIHTC accounts for the majority (approximately 90%) of all affordable rental housing created in the United States today, and is the most successful affordable housing tool in Illinois. The tax credits are more attractive than tax deductions as the credits provide a dollar-for-dollar reduction in a taxpayer’s federal income tax, whereas a tax deduction only provides a reduction in taxable income. Almost all investors in LIHTC projects are corporations.

The maximum rent that can be charged is based upon the Area Median Income (“AMI”) and is capped at 60% of AMI. Rents must be kept affordable for a 15-year initial “compliance period” and a subsequent 15-year “extended use period”.


IHDA Low Income Tax Credit-02

LIHTC is awarded under two different methodologies. Under either methodology, a project’s “eligible basis” is determined (for an in-depth explanation of what constitutes eligible basis, please see the QAP). Projects for new construction or rehabilitation of an existing building, if not funded by tax-exempt bonds, can receive a maximum annual tax credit allocation based on a rate which is generally 9% of the project’s eligible basis (“9% credits”). IHDA awards 9% credits based on a competitive process via two allocation rounds per year.

Projects with at least 50% of the financing coming from tax-exempt bonds can receive a maximum annual tax credit allocation based on a rate which is generally 4% of the project’s eligible basis (“4% credits”). IHDA accepts applications for tax-exempt bond projects seeking 4% credits at any time. These credits are not awarded via a competitive application round and therefore the project need only satisfy the mandatory requirements under the QAP.

A developer proposes a project to IHDA, wins an allocation of tax credits, completes the project, certifies its cost, and rents-up the project to low-income tenants. Simultaneously, an investor makes a “capital contribution” to the project’s owner in exchange for being “allocated” the entity’s LIHTCs over a ten-year period (syndication).The program’s structure as part of the tax code ensures that private investors bear the financial burden if properties are not successful. This pay-for-performance accountability has driven private sector discipline to the LIHTC program, resulting in a foreclosure rate of less than 0.1%, far less than that of comparable market-rate properties. As a permanent part of the tax code, the LIHTC program necessitates public-private partnerships, and has leveraged more than $100 billion in private equity investment for the creation of affordable rental housing nationally.

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.

2018-2019 Qualified Allocation Plan

For previous QAPs, please visit our Developer Resource Center.

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.

Recent PPA and LIHTC Full Round Results

2017 Round

2017 – Full Applications Received

2017 – LIHTC Projects Approved – Final 

2017 PPA Round II

Preliminary Project Assessment Submissions
Approved Preliminary Project Assessment Submissions

2017 PPA Round I

Preliminary Project Assessment Submissions
Approved Preliminary Project Assessment Submissions

2016 Round II

Preliminary Project Assessment Submissions
Approved Preliminary Project Assessments
Full Applications Received
LIHTC Projects Approved – Final 
Round II LIHTC Scoring Ranges

2016 Round I

Preliminary Project Assessment Submissions
Approved Preliminary Project Assessments 
Full Applications Received
LIHTC Projects Approved – Final 
Round I LIHTC Scoring Ranges

2015 Round II

Approved Preliminary Project Assessments
Full Applications Received
LIHTC Projects Approved – Final

2015 Round I

Approved Preliminary Project Assessments
Full Applications Received
LIHTC Projects Approved – Final

2014 Round II

Approved Preliminary Project Assessments
Full Applications Received
LIHTC Projects Approved – Final

2014 Round I

Approved Preliminary Project Assessments
Full Applications Received
LIHTC Projects Approved – Final

2013 Round II

Approved Preliminary Project Assessments (Updated 6/5/13)
Full Applications Received
LIHTC Projects Approved – Final

2013 Round I
Full Applications Received
LIHTC Projects Approved – Final

2012 Round II
Approved Preliminary Project Assessments 
Full Applications Received
LIHTC Projects Approved – Final

2012 Round I
Approved Preliminary Project Assessments
Full Applications Received
LIHTC Projects Approved – Final

2011
Approved Preliminary Project Assessments 
Full Applications Received
LIHTC Projects Approved-Final

2010
Approved Preliminary Project Assessments 
Full Applications Received
LIHTC Projects Approved, including Disaster Tax Credits-Final

2009 Round II
LIHTC Projects Approved, including Disaster Tax Credits – Final

2009 Round I
LIHTC Projects Approved-Final

The first step in applying for LIHTCs is to submit a Preliminary Project Assessment (PPA). The PPA addresses project concept, design, location and proposed tenant population. PPAs are either approved or denied by IHDA. Approval of a PPA does not guarantee an allocation of tax credits or any other IHDA resources.

2018-2019 QAP Schedule

Preliminary Project Assessments and Low Income Housing Tax Credit Applications are now accepted via the Multifamily Portal. IHDA will no longer accept paper applications. Beginning November 1, 2017, IHDA will accept requests for access to the Multifamily Portal. This will allow Sponsors to submit Preliminary Project Assessments under the 2018 and 2019 Qualified Allocation Plan. The request form can be found in the Developer Resource Center section of the IHDA Website or at https://ppa.ihda.org. All PPAs for funding sources are now accepted on a rolling basis pursuant to the dates listed below.

PPA and Application Timeline 2018 9% LIHTC

  • In order to be eligible to apply for 2018 9% Tax Credits, a Sponsor must have submitted a request for PPA approval by or before January 2, 2018. IHDA will notify Sponsors of the PPA results no later than February 2, 2018.
  • The application deadline for 2018 9% Tax Credits is March 2, 2018. Applications received after March 2, 2018 will not be eligible for 2018 9% Tax Credits.

PPA and Application Timeline 2019 9% LIHTC

  • In order to be eligible to apply for 2019 9% Tax Credits, a Sponsor must have submitted a request for PPA approval by or before January 4, 2019. Any PPA approved in connection with 2018 9% Tax Credit round will all be eligible to apply for 2019 9% Tax Credits. For PPA requests submitted on or after January 3, 2018, IHDA will endeavor to notify Sponsors of the PPA results within 45 days of IHDA’s receipt of the PPA; but in no event will such notification be provided later than February 2, 2019.
  • The application deadline for 2019 9% Tax Credits is March 1, 2019. Applications received after March 1, 2019 will not be eligible for 2019 9% Credits. Please note, applications for 2019 9% credits will not be accepted until February 2, 2019.

PPA and Application Timeline 4% LIHTC

  • IHDA is no longer accepting PPA requests under the 2016 and 2017 QAP. Previously approved PPA’s are valid for one year from the date of approval.
  • Any 4% applications with approved PPA’s may be submitted on a rolling basis until September 1, 2019.
  • Please note that IHDA will no longer accept paper applications. Beginning November 1, 2017, IHDA will accept requests for access to the Multifamily Portal. This will allow Sponsors to submit Preliminary Project Assessments under the 2018 and 2019 Qualified Allocation Plan. The request form can be found in the Developer Resource Center section of the IHDA Website or at https://ppa.ihda.org. IHDA will endeavor to notify Sponsors within 45 days of the Authority’s receipt of the request for 4% PPA approval.