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Home » Services » 45L Energy Efficient Tax Credits

45L Energy Efficient Tax Credits

Builders, owners and developers of residential homes and apartment buildings have the opportunity to earn tax credits for energy efficiency, if their properties meet certain qualifications. The 45L Energy-Efficient Home Tax Credit is equal to $2,000 per residential unit or dwelling to the developers of energy-efficient buildings. Qualifying properties include apartments, condominiums, townhouses and single family homes. These valuable credits are overlooked due to a lack of understanding about the qualification process.

Note: The 45L energy-efficient residential tax credit was extended in 2019 and is in effect through the end of 2021. The tax credit was retroactively extended to include 2018 and 2019. Any unused credits can be carried over for up to 20 years.

Eligible Properties​

Each unit should provide a level of energy efficiency that is higher than national energy standards; however, many of the newer developments already exceed these standards based on recent energy standards and building codes. 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.

  • Properties must be three stories or lower.
  • Builders/owners/developers must incorporate energy-efficient features such as high R-value insulation and roofing, windows, doors, and/or HVAC systems.
  • The property must have been built between August 5, 2005 and December 31, 2021.

Tax Credit Requirements​

Certification must be completed by a licensed professional that is an unrelated third party to the project. We provide 45L certifications that are evaluated, modeled and signed off by our licensed engineers. Once certification is complete you will receive a certification package with all necessary documentation and certifications to sustain the tax credit in the case of IRS audit

FAQ: 45L

The qualified contractor is the only person who can claim this tax credit. They are usually the developer, builder, or the homeowner of the building.  For example, if someone owns a home but hires a contractor to handle building or upgrading the home, the owner is the person who can benefit from this tax. But to qualify for the 45L tax credit, the home must be sold, leased, or rented.

Yes. Because of the Tax Increase Prevention Act of 2014, you can claim the credit retroactively. You can only claim the credit for properties built or remodeled in the past three years.

Both single family and multi-family dwellings that are three stories or less above grade; they must have a higher energy efficiency level than the 2006 IECC standards. Along with single family homes, other dwellings are eligible for the 45L tax credit like apartment buildings, townhouses, student housing, condominiums, and assisted living facilities. The housing must be designed for occupancy with one or more rooms, including a kitchen, a living room, and a chamber for sleeping.

Yes. Since Section 45L defines new construction” as including any substantial rehabilitation,” renovation or upgrading projects qualify as well as brand new construction.

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Andrew Krowne, CPAKrowne Certified Public Accountants
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