Public
Incentives
State Matching Funds
If a company invests in an approved REACH Illinois program, it could leverage
a dollar-for-dollar match from the Illinois Housing Development Authority (IHDA).
The State of Illinois will match down payment assistance for eligible employees
participating in employer-assisted housing programs up to a maximum $5,000 per
employee household. Funds are specifically targeted to employers in Illinois
that are partnering with the Metropolitan Planning Council (MPC) in the Chicago-region
or Housing Action Illinois (Housing Action) in the rest of the state and an approved
REACH Illinois housing counseling agency – community-based, nonprofit housing
counseling agencies specializing in homebuyer education as an outsourced service
to employers. In addition to leveraging private sector support for down payment
assistance and homeownership counseling, these funds help employees live closer
to work, decreasing their commute times and improving their quality of life.
Down Payment Match Amount
IHDA’s match amount is determined by household income and size. IHDA will
match up to $5,000 for households earning less than 50% of the region’s
Area Median Income (AMI) or up to $3,000 for households earning between 50 and
80% of AMI. The employer needs to contribute a minimum $1,000 of direct assistance
to an employee for the employee to be eligible to receive the state match. The
assistance provided by IHDA is not considered taxable income to the employee
and is forgiven over a five year period.
Eligibility Requirements
A homebuyer is eligible for state matching funds if he or she:
1.Works for an employer participating in the REACH Illinois employer-assisted
housing initiative;
2.Has a household income less than 80% of the Area Median Income for the particular
region;
3.Works with an approved homeownership counseling agency; and
4.Contributes at least $1,000 to down payment and closing costs from personal
savings.
Further eligibility requirements, such as required tenure at the company and
the new home’s proximity to the participant’s workplace, can be determined
by the employer.
State Tax Credit
The Illinois Affordable Housing Tax Credit Program provides a $.50 tax credit
on state income tax liability for every $1 in cash, land or property donated
for affordable housing creation or invested in REACH Illinois. The State has
allocated $2 million in tax credits for EAH programs to benefit households earning
no more than 120 percent of the region’s Area Median Income. Eligible programs
include down payment assistance, reduced interest mortgages, individual development
accounts and rental subsidies to help employees find and finance homes near work.
The tax credit allocation also provides $2 million in tax credits for technical
assistance to support affordable housing initiatives, such as homebuyer counseling
and outsourced EAH program administration costs. The tax credit is for the year
in which the contribution is made. If the credit exceeds the individual or organization’s
annual tax liability, the tax credit may be carried forward and applied to taxes
for the five years following. The law also provides for a transfer of the tax
credit, enabling a tax-exempt employer (or one with limited tax liabilities)
to transfer (in effect, “sell”) the credits to an individual or corporation
that has a tax liability.
A nonprofit housing organization can apply to the Illinois Housing Development
Authority for tax credits that will be allocated to the contributing individual
or corporation.
How It Works:
Example A: Company commits $70,000 to Housing Counseling Agency
for an employer-assisted housing program (includes counseling
costs, administration and down payment assistance for employees).
Company may deduct $35,000 from its state income tax liability.
Company has the option of carrying the credit forward over the
next five years if the tax credit exceeds the company’s
tax liability for this year.
Example B: Nonprofit Employer (e.g., hospital) commits $70,000
to Housing Counseling Agency for an employer assisted housing program.
Employer involves third party donor (e.g. a member of the agency’s
board of directors, interested corporation, etc.) by arranging
a “sale” of the tax credits. Donor “purchases” the
tax credits from the Employer for a negotiated price. The Employer
recoups some of the costs, and the Donor receives the state tax
credit.
* Currently tax credits are being sold at about 82% of face value.
Katie Gottschall Donohue
Director of Technical Assistance
312-939-6074
katie@housingactionil.org
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