45L Federal Tax Credit

Developers and builders of single-family homes and multifamily buildings may benefit from recent legislation extending the Section 45L Energy Efficient Home Credit.

• A tax credit of $2,000 per dwelling unit is available for qualifying properties.
• Buildings placed in service between 2018 and 2020 are eligible. 
• Projects located where building codes have a strong energy efficiency requirements are great candidates for this tax credit.

The Inflation Reduction Act of 2022 impact on 45L:

• Increases the 45L tax credit to $2,500, beginning in 2023 for single family and manufactured homes when they are constructed according to the standards set by ENERGY STAR Residential New Construction Program or the Manufactured Homes Program. 
• Extends the credit to homes sold or leased in 2022. 
• Increases the 45L tax credit up to $5,000 for single family and manufactured homes if they are a DOE zero Energy Ready Home (ZERH).
• For multifamily homes constructed after 2022, the 45L tax credit is $500 if the property meets ENERGY STAR Single Family New Homes Program or $1,000 when meeting the DOE Zero Energy Ready Home requirements.
• If prevailing wage requirements are also met for multifamily homes, the tax credit increases from to $2,500 or $5,000, respectively. 

Qualifying Properties

• Single-family homes (Buyers may qualify if tax credit is unclaimed)
• Multifamily up to 3 stories above grade (excludes below-grade parking)
• New construction, substantial reconstruction, and rehabilitation

To claim the tax credit, each dwelling unit must consume at least 50% less energy for heating and cooling than a comparable dwelling unit under the 2006 IECC (International Energy Conservation Code). Improvements to the building envelope must account for at least 10% of the overall reduction. Improvements must be certified by an eligible certifier that is qualified under RESNET, CA HERS Rater or an equivalent rating standard.

Partner Energy has certified professionals on staff that can provided energy modeling and on-site inspection & verification to help you determine if your property qualifies for the Section 45L tax credit and issue signed 45L certificates to builders.