Section 45L Tax Credit: Energy Efficient Home Tax Credit

Tax Point Advisors National Expertise and Local Touch help you benefit from the energy-efficiency measures you have put into your residence.

When Congress enacted the Protecting Americans from Tax Hikes (PATH) Act of 2015, which made research and development (R&D) tax credits permanent, the legislation also extended the New Energy Efficient Home Tax Credit under Code Section 45L through 2016.

Overview

Under the provisions of the 45L tax credit, eligible contractors may request up to a $2,000 credit for new energy-efficient systems and installations performed between August 5, 2005 and December 31, 2016. The 45L tax credit can be claimed retroactively for all residential and apartment buildings completed within the last four years, and any unused credit may be carried forward for up to 20 years.

Eligibility

Property

To claim the 45L tax credit, the property must meet the following criteria:

  • Built in the U.S. between August 5, 2005 and December 31, 2016
  • For single- and multi-family dwelling units, the unit must consume a minimum 50% less energy to offer the same heating and cooling functions as any identical non-energy-efficient residence
  • Manufactured homes must reduce energy usage by at least 30%
  • 10% of the energy efficiency must be derived from the building envelope
  • Properties that undergo major rehabilitation and new construction can qualify for the 45L tax credit if they pass the energy audit and get certified as energy efficient
  • To qualify for the 45L tax credit, the home must be sold, leased or rented

Individuals

  • A person must own and have a basis in the qualified energy efficient home during its construction to qualify as an eligible contractor with respect to the home
  • A “person” can be an individual, a trust, an estate, a partnership, an association, a company or a corporation
  • In addition to single-family homes, other dwellings like apartment buildings, townhouses, student housing, condominiums and assisted living facilities are eligible for the 45L tax credit.
  • The qualified contractor – typically the developer, builder or homeowner – is the only person who can claim the 45L tax credit and must own the unit at the time of construction or improvement.

Application Process

Eligible contractors use Form 8908 to claim a credit for each qualified energy efficient home sold during the year. The first step toward applying for the 45L credit is a detailed energy analysis that must be certified and documented by a third-party licensed professional. Additionally, homeowners should acquire an energy efficiency overview of their current energy consumption before having a tax credit analysis to see if they qualify for the 45L tax credit.

Tax Point Advisors works with CPA firms and business owners to coordinate the energy analysis for the 45L tax credit. We offer in-house engineering capabilities and the tax expertise to help you apply and qualify for this valuable tax credit. 

Click here to request a free 45L assessment.

To learn more about tax benefits from the 45L Energy Efficient Home Tax Credit, simply fill out the form on this page and a member of our team will be in touch with you. Or, you may call us at (800) 260-4138 nationwide.


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