§45L Energy Efficient Home Credit

Up to $5,000 Federal Tax Credit per Qualified Dwelling Unit. The Act provides new requirements and higher benefits for units sold or leased from January 1, 2023 through December 31, 2032.

The §45L Energy Efficient Home Credit, as established by the Energy Policy Act of 2005, allows eligible developers to claim a tax credit for each dwelling unit. Both single family homebuilders and multifamily developers can benefit from the §45L Credit. The Inflation Reduction Act of 2022 extended the §45L Credit for homes sold or leased during 2022 with little modification.

§45L CREDIT FOR 2022 AND PRIOR

For residences leased or sold prior 2022, single family homebuilders and multifamily developers can benefit from the §45L Credit. The maximum credits per dwelling unit are:

• $2,000 per unit for new energy-efficient home.
• $1,000 per unit for manufactured homes.

Requirements

An eligible contractor must have constructed a qualified energy efficient home, as well as owned and have had a basis in the home during its construction. Both new construction and renovations to existing residences are eligible when they meet the following qualifications:

Certified to provide an annual level of heating and cooling energy consumption that is at least 50% below a comparable dwelling unit constructed in accordance with the standards.

Improvements to the building envelope that provides at least one fifth of the 50% reduction in energy consumption.

Three stories above grade or less in height.

Sold or leased as a residence (the credit can be taken retroactively for three years back or to any open tax year).

The credit applies to single-family homes as well as apartment complexes, assisted living facilities, student housing and condominiums. Each unit in a multifamily residential facility may qualify.

"Achievement is not about steering clear of challenges, but about seizing them as chances to unravel the secrets of your true capabilities."

Our Service

Our §45L Credit team includes HERS raters and tax professionals who will perform free assessments to prequalify your homes. Our study includes:

Reviewing construction documents

Interviewing design professionals, project managers, and other relevant personnel

Performing necessary testing and inspections

Modeling energy efficiency using IRS-approved software

Preparing certificates of compliance signed under penalties of perjury by a HERS rater

Coordinating with your tax preparer

Providing free audit support

Case Study

Each unit in a newly constructed apartment community qualified for the $2,000 per unit §45L Credit. With 220 units, the developer received a total tax credit of $440k.

Requirements

01.

Single Family Homes Benefits and Requirements

• $2,500 tax credit for single family homes certified as ENERGY STAR Single Family New Homes Program Version 3.1. (For homes acquired¹ before January 1, 2025 and Version 3.2 thereafter).

• $5,000 tax credit for single family homes certified as DOE Zero Energy Ready Home (ZERH).

02.

Manufactured Homes Benefits and Requirements

• $2,500 tax credit for manufactured homes certified as ENERGY STAR Manufactured Home National Program requirements.

• $5,000 tax credit for manufactured homes certified as DOE Zero Energy Ready Home (ZERH).

03.

Multifamily Homes Benefits and Requirements

• $500 tax credit for multifamily homes constructed after 2020 and certified as ENERGY STAR Single Family New Homes Program. When constructed with prevailing wage, the credit increases to $2,500.

• $1,000 tax credit for multifamily homes certified as DOE Zero Energy Ready Home. When constructed with prevailing wage, the credit increases to $5,000.

04.

Buildings Higher Than Three Stories are Eligible

• Beginning 2023, all residential buildings are eligible. Homes leased or sold as a residence within buildings higher than three stories are eligible, including:

• Low-rise: 1-4 stories
• Mid-rise: 5-9 stories
• High-rise: 10 or more stories

§45L Credit Summary

1. Acquired by a person for use as a residence
2. Single Family includes site-built and modular single family homes, duplexes and townhomes

What Our Clients Say

Here are the thoughts of our esteemed clients on their experience working with us.

Choosing IronGate Business Advisors was a pivotal decision. Their professional approach and unwavering dedication made a significant impact on our project. They went above and beyond, delivering outstanding results.

Our experience with IronGate Business Advisors was exceptional. Their team's expertise and proactive attitude set them apart. They took our project to new heights. I am extremely impressed and recommend their services.

Collaborating with IronGate transformed our business. Their expertise and commitment were clear from the beginning. They not only met but surpassed our expectations. I highly endorse them.

Easy to communicate with. IronGate Advisors takes as much time as is necessary to share their insights, and they are always available.

Passion, knowledge and a genuine interest in achieving the best for clients is what makes them a truly professional Financial Advisor. Dedication to clients, business excellence and education sets them apart and I would highly recommend IronGate to anyone wanting to achieve better financial outcomes.