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Up to $5,000 Federal Tax Credit per Qualified Dwelling Unit.
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The §45L Energy Efficient Home Credit, as established by the Energy Policy Act of 2005, allows eligible developers to claim a tax credit for each dwelling unit. Both single family homebuilders and multifamily developers can benefit from the §45L Credit. The Inflation Reduction Act of 2022 extended the §45L Credit for homes sold or leased during 2022 with little modification.
The Act provides new requirements and higher benefits for units sold or leased from January 1, 2023 through December 31, 2032.
Each unit in a newly constructed apartment community qualified for the $2,000 per unit §45L Credit. With 220 units, the developer received a total tax credit of $440k.
• $2,500 tax credit for single family homes certified as ENERGY STAR Single Family New Homes Program Version 3.1. (For homes acquired before January 1, 2025 and Version 3.2 thereafter).
• $5,000 tax credit for single family homes certified as DOE Zero Energy Ready Home (ZERH).
• $2,500 tax credit for manufactured homes certified as ENERGY STAR Manufactured Home National Program requirements.
• $5,000 tax credit for manufactured homes certified as DOE Zero Energy Ready Home (ZERH).
• $500 tax credit for multifamily homes constructed after 2020 and certified as ENERGY STAR Single Family New Homes Program. When constructed with prevailing wage, the credit increases to $2,500.
• $1,000 tax credit for multifamily homes certified as DOE Zero Energy Ready Home. When constructed with prevailing wage, the credit increases to $5,000.
• Beginning 2023, all residential buildings are eligible. Homes leased or sold as a residence within buildings higher than three stories are eligible, including:
• Low-rise: 1-4 stories
• Mid-rise: 5-9 stories
• High-rise: 10 or more stories
Our §45L Credit team includes HERS raters and tax professionals who will perform free assessments to prequalify your homes. Our study includes:
Reviewing construction documents
Interviewing design professionals, project managers, and other relevant personnel
Performing necessary testing and inspections
Modeling energy efficiency using IRS-approved software
Preparing certificates of compliance signed under penalties of perjury by a HERS rater
Coordinating with your tax preparer
Providing free audit support
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1. Acquired by a person for use as a residence
2. Single Family includes site-built and modular single family homes, duplexes and townhomes
"Achievement is not about steering clear of challenges, but about seizing them as chances to unravel the secrets of your true capabilities."
For residences leased or sold prior 2022, single family homebuilders and multifamily developers can benefit from the §45L Credit. The maximum credits per dwelling unit are:
• $2,000 per unit for new energy-efficient home.
• $1,000 per unit for manufactured homes.
An eligible contractor must have constructed a qualified energy efficient home, as well as owned and have had a basis in the home during its construction. Both new construction and renovations to existing residences are eligible when they meet the following qualifications:
Certified to provide an annual level of heating and cooling energy consumption that is at least 50% below a comparable dwelling unit constructed in accordance with the standards.
Improvements to the building envelope that provides at least one fifth of the 50% reduction in energy consumption.
Three stories above grade or less in height.
Sold or leased as a residence (the credit can be taken retroactively for three years back or to any open tax year).
The credit applies to single-family homes as well as apartment complexes, assisted living facilities, student housing and condominiums. Each unit in a multifamily residential facility may qualify.
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