Cost-benefit model
Employer-assisted housing programs can be designed to fit both your personnel objectives and budget. An employer's tax status will impact the tax benefits of the program. Examples of each of the two categories (for-profit and non-profit) are presented below.
Example A: A for-profit company
In this example, an investment of $22,000 yields a program valued at $34,000 with a net cost of less than $3,000. This size program could be suitable for a company with 200-400 employees.
| Budget | Cost |
|---|---|
| Counseling/administration: 15–20 employees | $10,000 |
| Down payment assistance: 4 employees at $3,000/employee | $12,000 |
| Gross investment by employer | $22,000 |
| Less state tax credit | -$11,000 |
| Less federal tax deduction* | -$8,360 |
| Net cost of program | $2,640 |
| Program value | Cost |
|---|---|
| Employer investment | $22,000 |
| Matching funds** | $12,000 |
| Total financial value | $34,000 |
*Figure is based on the 38% tax bracket [(full investment) × .38].
**If employees meet state income requirements, they will be eligible for up to $5,000 in matching down payment assistance.
Example B: A nonprofit employer
This second model considers an employer without tax liability, such as a nonprofit hospital, university or municipality. Since this employer cannot claim the federal tax deduction or directly use the state tax credits, the credits can be transferred or "sold" to another entity with Illinois tax liability to realize this benefit.* In this example, a program valued at $70,000 would have a net cost of around $33,000, after an initial employer investment of $55,000.
| Budget | Cost |
|---|---|
| Counseling/administration: 20–30 employees | $20,000 |
| Down payment assistance: 7 employees at $5,000/employee | $35,000 |
| Gross cost of program | $55,000 |
| Less state tax credit* | -$22,000 |
| Net cost of program | $33,000 |
| Program value | Cost |
|---|---|
| Employer investment | $55,000 |
| Matching funds** | $15,000 |
| Total financial value | $70,000 |
*Entities without state tax liability are able to transfer or sell their tax credits to another entity with Illinois tax liability. Tax credit sales usually yield $.80 to $.83 on the dollar.
**If employees meet state income requirements, they will be eligible for up to $5,000 in matching down payment assistance. This is an estimate, again the amount of matching funds drawn for a given program will depend on the income of the participants in the program.