The energy efficient home credit (the 45L credit), which provides eligible contractors up to a $5,000 tax credit for each energy efficient dwelling unit, is retroactively available for projects placed in service from 2020 to 2022, and through the end of 2032. Read on for eligibility requirements and then submit a 45L qualification form to see if your project is a good fit.
The 45L credit can have substantial value, as demonstrated by these case studies:
Three-story, 83-unit, multi-family project, fully leased in the eligible year. In this project, 100 percent of the units qualified for the credit.
Tax credit ($5,000 x 83 units) - $415,000
Project certification fee ($400 x 83 units) - $33,200
Net benefit - $381,800
Four-story, 106-unit, multi-family project, fully leased in the eligible year but first level was below grade parking. In this project, 90 of 106 units (or 85 percent) qualified.
Tax credit ($5,000 x 90 units)- $450,000
Project certification fee ($400 x 90 units) - $36,000
Net benefit - $414,000
An eligible contractor must obtain certification from an eligible certifier before claiming the energy efficient home credit with respect to the dwelling unit. An eligible certifier is a person not related to the eligible contractor that has been accredited or otherwise authorized by the Residential Energy Services Network (RESNET) or an equivalent rating network. The certifier conducts computer modeling and on-site testing and prepares a certification package with declaration that under penalties of perjury the certifier believes that the facts presented in the certification are true, correct and complete. The fee for certification is typically charged on a per unit basis.
The 45L credit is available to an eligible contractor in the year the certified dwelling units are leased or sold. Previously, there was some confusion as to who qualifies as the eligible contractor with respect to the home. For purposes of 45L, a person must own and have basis in the qualified energy efficient home during the construction to qualify as the eligible contractor with respect to the home. For example, if a person hires a third party contractor to construct the home owns and has basis in the home during its construction, the person that hires the third party contractor is the eligible contractor and the third party contractor is not the eligible contractor.
Think you have a project eligible for 45L? Submit a project qualification form to find out