The guidelines were never made permanent so there are two iterations you should consider. The first one should be used if you are filing, or adjusting, tax returns for 2019-2022. The second begins in 2023. Read on for details.
What Is § 45L Tax Credit
The §45L Energy Efficient Tax Credit was implemented under the Federal Energy Policy Act of 2005
Tax Years 2019-2022
The §45L Tax Credit for 2019-2022 tax returns is potentially worth up to $2,000 for each qualified new energy efficient unit acquired for use as a residence after December 31, 2005, and before January 1, 2023. The people who would benefit the most are eligible contractors of multi-resident buildings no taller than three stories. However, single-family homes, duplexes and townhomes are also eligible.
If you believe a building qualifies, it must be inspected by an eligible certifier, like Scarpello Consulting. If the building passes, we will provide you with the official certification to be kept on file. Then you may apply the tax credit to the return.
Tax Years 2023-2032
The §45L Tax Credit beginning in 2023 has slightly different criteria. You will still need to be an eligible contractor, but multi-residence buildings higher than three stories should also qualify. As before, some newly constructed single-family homes, townhomes and duplexes can qualify as well.
The units must pass either the EnergyStar certification process for new construction or a higher class certification called Zero Energy Ready. The credit also varies from $500 to $5,000 per unit depending on which certification is met and some other requirements depending on property type.
The Certification Process
1. Establish Criteria
Ensure energy consumption is least 50% below reference unit and all other criteria is met
2. Inspect Property
Complete inspection of the building as an eligible certifier accredited by RESNET
3. Obtain Certification
Provide you with the proper certification documents using an IRS approved software
4. Maintain Records
Statements do not have to be submitted, but must be kept with the taxpayer’s records
WHO IS ELIGIBLE
To be eligible for a tax credit, you must meet these criteria
OWN A DWELLING UNIT IN THE UNITED STATES
Simply defined as a single unit providing complete independent living facilities for one or more persons.
BE AN ELIGIBLE CONTRACTOR
This means the contractor constructed, or contracted to have constructed, the dwelling unit(s) and who owned and had basis in the property during the construction.
BUILDING MEETS ENERGY SAVINGS REQUIREMENTS
Dwelling must be certified to have a level of heating and cooling energy consumption at least 50% below that of a reference unit for the first level of certification.
If you have an energy-efficient residence that you think could qualify, give us a call and we can discuss your options: 877.410.5040
Don’t Leave A Tax Credit On The Table