How to Claim the 45L Energy-Efficient Home Tax Credit

If you are a builder, owner or developer of a residential home or apartment building, you may be a candidate to earn tax credits for energy efficiency. The 45L tax credit for energy-efficient homes provides $2,000 per unit for owner-occupied or rental dwelling buildings that meet certain qualifications. However, these valuable credits are often overlooked simply because those who qualify don’t understand the application process.

Overview of Qualifications

As a reminder, to qualify for the 45L tax credit, properties must incorporate energy-efficient features such as high R-value insulation and roofing, HVAC systems and/or windows and doors. The property must have been built between August 5, 2005 and December 21, 2020. Keep in mind that the building must be three stories or lower. Qualified contractors can include the builder, developer or homeowner—even when the owner hires a contractor to make the energy-efficient improvements, the homeowner gets the credit. For more information on the specific requirements, read our 45L FAQs.

Claiming the 45L Tax Credit

You don’t have to complete the application process yourself! In fact, you will need a qualified and unrelated third party to provide a detailed energy analysis. The next step is for that analysis to be certified by an engineer. It is helpful to work with a specialty tax services provider that can provide all of these services for you. Developers and builders should work with a licensed engineer who can provide 45L certifications that are evaluated, modeled and approved. Once your 45L certification is complete, your will receive a full certification package that contains all the necessary certifications and documentation you’ll need to sustain the tax credit if the IRS requests it.

ETS can provide a complimentary pre-qualification review of your property to determine if your units will pass the energy requirements. If they do not, we will provide guidance for the least costly upgrades to help the units pass.

The good news is that you can go back and claim the 45L credit for properties that have been built or remodeled in the past three years. In late 2019 the tax credit was retroactively extended for 2018 and 2019, and it can be claimed through the end of 2020. Additionally, unused credits can be carried over for up to 20 years.

The 45L offers a win/win for those interested in environmentally friendly buildings while having cost savings to reinvest in future projects.

To learn more about how ETS is helping clients take advantage of valuable energy-based tax benefits like the 45L tax deduction, or to request detailed information, contact us at 800.236.6519 or visit our 45L Tax Credit page for more information.

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