45L Tax Credits For Multifamily Dwellings

Tax Credit for Energy Efficient Residential BuildingsThe New Energy Efficient Home Tax Credit, Code Section 45L, has been extended to December 31, 2011.  Each newly contractor built, energy efficient residential dwelling, purchased from the contractor and used as a residence over the last few years is eligible for the 45L Tax Credit of $2,000.

Properties That Qualify


  • Single family Homes,
  • Multifamily properties, up to three stories
  • Apartments, up to three stories
  • Units within an apartment building or condominium
  • A house boat
  • House trailer

Also, the property can be either the principle place of residence or a vacation home.

Manufactured homes meeting the criteria, may also benefit from a tax credit of $1,000 to $2,000.

Qualifying Requirements

  • The property must be located in the United States
  • Be substantially completed between August 8, 2005 and before December 31, 2011, and
  • The residential dwelling must meet the energy savings requirements

Additionally, the property does not have to be new, it can be substantially reconstructed or rehabilitated.

An energy efficient property is defined as;

The residential dwelling must be certified, have a projected level of 50% reduction of energy usage in annual heating and cooling energy, than that of a property manufactured from the 2004 International Energy Conservation Code (IECC). Additionally, of the 50%, at least 1/5th is a result of building envelope improvements, eg. insulation, energy efficient windows and so on.

How to identify and eligible contractor

Eligible contractors are those who constructed the energy efficient residential dwelling, and must own and have a basis on the property during its construction. Additionally eligible contractors could have hired a third party contractor to complete the work. Also, an eligible contractor may also be in the form of an individual, a trust, an estate, a partnership, an association, a company or corporation.

Credit usability

The credit has a five year carry back term, but not prior to when the credit was allowed in 2006 and a 20 year carry forward.

Tax Credits add up usability

As a quick calculation, the following demonstrates the tax credit available for the number of residences.

Other available Deductions and Credits

Depending on the location of the property State credits or deductions may be available. Also, other Federal incentives may apply to your property.

How to certify the property

It is an IRS requirement that a credited eligible certifier skilled and approved to perform energy performance measures certify the property. ETS is that certified, energy star partner engineering firm, having performed thousands of certifications nationally. ETS will work with you all the way, to ensure that your property meets the requirements of the IRS and we will also assist you to identify other relevant tax benefits available. To ask about a feasibility study or other tax benefits available, call us today.