What Is §45L Tax Credit
The §45L Energy Efficient Tax Credit allows eligible contractors to receive a $2,000 per unit tax credit for implementing energy efficient elements within their buildings.
The New Energy Efficient Home Credit under Internal Revenue Code §45L allows qualified dwellings to receive a $2,000 per unit tax credit. You must be an eligible contractor of a building that is less than four stories, has at least 40 units and has an energy consumption at least 50% below that of a reference unit.
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 the $2,000 tax credit per dwelling, 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 that is not more than three stories tall.
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.
To answer commonly asked questions about exactly what kind of building is eligible for the tax credit, we have provided these additional details:
- The building must have a minimum of 50 units to be evaluated. If a building has fewer units, the cost of the evaluation would be approximately the same as the credit you would obtain.
- Only multi-family and senior-living facilities are eligible. A single-family home would not satisfy the energy savings requirements and the inspection costs would be too high.
- Building must be three stories or less. Anything with four or more stories is not eligible for the credit.
- Building needs to have been acquired for use after December 31, 2005 and before January 1, 2022. The credit is only eligible for tax returns from 2017 to 2021. You may go back and amend returns from 2017 to present if you have an eligible building.
This tax credit expires soon.
Make sure you take advantage of everything it has to offer.