45L Energy Efficient Home Tax Credit
Claim $2,000 Per Qualifying Residential Unit
Section 45L is an engineered-based tax credit available to builders and developers for the reduction of energy usage in residential buildings. The incentive allows for a tax credit of $2,000 per qualifying dwelling unit.
Eligible Properties & Contractors
In order to meet the requirements of Section 45L, the property must be 3 stories or less above grade. Qualifying properties include:
- Single Family Homes
- Multi-Family Homes, Apartments, or Condominiums
- Assisted living facilities and student housing
- Low Income Housing (LIHTC)
Who is the Eligible Contractor?
The 45L credit is available to the “eligible contractor”—the person or company that owns and has a basis in the qualified energy-efficient home during its construction. For example, if a person hires a third-party contractor to construct the home, but the person who hired them owns the home during construction, the owner is the eligible contractor, not the third-party builder.
Certification & Energy Standards
Many newer or rehabbed developments already exceed the required standards based on recent energy codes. To qualify, each unit must meet a level of energy efficiency that is higher than 2006 IECC standards or meet a 50% reduction in savings.
An eligible contractor must obtain certification from an independent eligible certifier before claiming the energy home credit. This certifier, who must be authorized by the Residential Energy Services Network (RESNET) or an equivalent network, conducts the required computer modeling and on-site testing.
ABIS facilitates this entire engineering-based approach, which standard CPAs typically are not qualified to perform.
Retroactive Claims Are Available
Tax returns may generally be amended up to 3 years from the date the return was filed to benefit from a Section 45L Tax Credit. We recommend that any apartment or condominium project developed (new construction or rehabilitation) within the past four years be evaluated for the 45L Tax Credit.