Low Income Housing Help Com - The Low Income Housing Tax Credit (LIHTC) is a dollar-for-dollar federal tax credit for affordable housing investments. It was created under the Tax Reform Act of 1986 and encourages the use of private capital in the development of affordable housing targeted at low-income Americans. The program is administered by state housing finance agencies at the state level (ie, each state receives a fixed allocation of credits based on its population). Appraises applications according to our Qualified Allocation Plan (QAP).
The LIHTC accounts for the majority (about 90%) of all affordable rental housing built in the United States today and is the most successful affordable housing instrument in Illinois. Tax credits are more attractive than tax deductions
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The maximum rent that can be charged is based on the Area Median Income ("AMI") and covers 80% of AMI. Rent must be available for an initial 15-year “Eligibility Period” and a subsequent 15-year “Extended Use Period”.
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LIHTCs are awarded using two different methods. Under both methods, the project's "eligible base" is defined (for an in-depth explanation of what constitutes an eligible base, see the QAP). New construction or existing building rehabilitation projects, unless financed by tax-exempt bonds, generally receive a maximum annual tax credit based on a rate of 9% of the project's eligible base (the "9% credit"). 9% credit award based on competitive process through two disbursement rounds per year.
Projects in which at least 50% of the financing comes from tax-exempt bonds can receive a maximum annual tax credit based on a rate that is generally 4% of the project's eligible base ("4% credit"). Accepts applications for tax-free bond projects to avail 4% credit at any time. These credits are not awarded through a competitive application round, and therefore projects must only meet the mandatory requirements set out in the QAP.
The developer proposes the project, wins the tax credit, completes the project, verifies its cost, and leases the project to low-income tenants. At the same time, the investor makes an "equity contribution" to the project owner in exchange for an "allocation" of the unit's LIHTC over ten years (syndication). Encumbrances if the properties are not successful. This commitment drives private sector discipline to the LIHTC program, resulting in a foreclosure rate of less than 0.1%, well below comparable market rates. As a permanent part of the tax code, the LIHTC program requires public-private partnerships and has leveraged more than $100 billion in private investment to build affordable rental housing.
The Annual Qualified Allocation Plan (QAP) establishes evaluation criteria for all projects applying for tax credit allocations. The QAP becomes effective after approval by the Council and the Governor.
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The IRS regulations for the federal tax credit program are contained in section 42 of the Code of 1986, as amended. Additionally, state regulations governing the LIHTC program are contained in the Illinois Administrative Code, Title 47, Chapter II, Section 350.
The first step in applying for LIHTCs is to submit a Preliminary Project Assessment (PPA). The PPA deals with the concept, design, location and proposed tenant population of the project. PPA is approved or rejected. Approval of a PPA does not guarantee allocation of tax credits or other resources.
Three summits were held this spring with affordable housing practitioners, advocates and the general public to inform proposed changes and policies for the 2022-2023 Qualified Allocation Plan (QAP). These listening sessions provide an important forum for public feedback and comments, and the Authority greatly appreciates the participants in the virtual summit. The Authority has documented all information received from the Summit and will work to incorporate and collect any additional information as it finalizes the 2022-2023 QAP for public comment. A summary can be found at the link below.
Preliminary Project Appraisals (PPAs) and Low Income Housing Tax Credits (LIHTC) are now accepted through the Multifamily Portal. To get access to the multi-family portal, please submit the MF Portal account request form from the website or you can get the form at https://ppa..
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The Illinois Housing Development Authority () is pleased to announce the tentative dates for the 2023 9% Low Income Housing Tax Credit (LIHTC) application round. Please see the timeline of key events for the 2023 9% LIHTC round:
As is well known throughout the affordable housing industry, Congress recently created a new housing option known as "means of income." Instead of selecting a minimum cutoff of 20/50 or 40/60, the owner may choose to average the income by allocation. This allows the property to serve households up to 80% AMI as long as at least 40% of the total units are rent and income restricted and the average income limit for all tax credit units in the project is 60% AMI or below.
The Authority understands that its stakeholders are excited to take advantage of this new option to better serve those seeking affordable housing. Given the nuances of this new allocation option, the Authority will carefully review applicable law and industry guidance, with the goal of developing policy around moderate income assessments that will ensure that the Authority continues to administer the Low Income Housing Tax (“LIHTC”). Program in the most efficient and effective manner possible.
As the Authority continues to analyze this new allocation option, the Authority wanted to provide some information on the options currently under consideration. The information contained in this bulletin is not intended to be specific or complete. The final government policy may or may not include the elements discussed below. Further, if found valid, the Authority will take steps to revise the 2018-2019 Qualified Distribution Plan.
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Please note that a development will not be eligible to select the income averaging if: (i) the development received a 9% LIHTC award from the Authority in 2018 (or earlier); or (ii) the development will receive a 9% reward from the authorities in 2019; or (iii) the developer has already entered into an extended use agreement (including reuse); or (iv) the development has already filed Form 8609.
Developments seeking the 4% LIHTC that wish to elect the income median are considered by the Authority on a case-by-case basis. Tax-exempt bond developments must still meet all applicable bond compliance requirements.
Additionally, the Authority is in the process of updating the Affordable Rental Unit Survey (ARUS) to reflect all eligible income levels based on median income levels. For more information, please click on the link below.
The status of applications for all PPAs and resources as well as the current portfolio can be found in the fully searchable mapping tool below. Click on the map below to browse the portfolio and pending projects. Many affordable rental housing residents across the country continue to lack access to broadband in their homes, but effective use of long-term federal tax credits can help close the gap in these housing units. Funding is not provided by the US Department of Housing and Urban Development (HUD).
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Recognizing the critical importance of high-speed Internet access, HUD's rule, effective in 2017, requires the installation of broadband infrastructure in new and rehabilitated federally assisted multifamily housing. The rule is an important step toward improving broadband access for households in affordable rental housing, but HUD-funded units represent only a fraction of new affordable housing.
The Low Income Housing Tax Credit (LIHTC), which began in 1986, provided a way to provide access elsewhere. Tax credits are the primary source of affordable housing production in the United States today, although the full availability of competitive LIHTCs is limited; The IRS allocates them to states each year based on a formula and the level of appropriations by Congress. State housing agencies then allocate credits to eligible projects through a competitive process. Each state sets its own priorities and scoring criteria, known as a Qualified Allocation Plan (QAP).
States establish threshold requirements for new incidents and then set additional priorities through a scoring system in the states' QAP. For example, Massachusetts awards extra points for climate-resilient design, while Delaware has incentives to include private outdoor space for each unit. The process of allocating these credits is highly competitive. While the total point scale varies by state, developers have a strong incentive to score as many points as possible due to the number of projects seeking credit. Therefore, QAP requirements have a major impact on how affordable rental housing will be constructed, and this means that this process presents an opportunity to meet broadband requirements.
Many states include broadband and digital literacy incentives in their QAPs, although the specifics vary. Approaches include incentives for in-unit wiring, ongoing service delivery, access to common areas (such as computer labs for residents), or digital skills training. These features may be requirements for new LIHTC development or may be encouraged by awarding additional points in the plan's calculation.
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Some states encourage broadband access in community areas or in dedicated computer labs for residents. For example, Georgia requires that applicants provide free high-speed Wi-Fi Internet access in required community rooms or buildings.
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