Section 45L Tax Credit: Energy Efficient Home Tax Credit - NOW EXTENDED THROUGH DECEMBER 31, 2032.

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

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 in units leased or sold in what is currently an open tax year through December 31, 2022. For units sold or leased after December 31, 2022 the credit amount can vary from $500 up to $5,000 per unit.  The 45L tax credit can be claimed retroactively for all residential and apartment buildings completed within the open tax years (usually 3-4 prior years for most taxpayers), 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:

• Units, homes leased up or sold in an open tax year (generally the last 3 years)
• Can be no more than 3 stories above grade if sold or leased up in 2022 or earlier – for 2023 and after there is no height requirement 
• For single- and multi-family dwelling units pre-2023, the unit must consume a minimum 50% less energy to offer the same heating and cooling functions as any identical non-energy-efficient residence
• Post 2022 buildings must meet either ENERGY STAR Single-Family New Homes National Program Requirements, DOE Zero Energy Ready Home National Program Requirements or ENERGY STAR Manufactured Home National Program Requirements depending on what level of credit is claimed and the property fact pattern  
• 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

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.  Although this tax incentive has been in place for over a decade, few taxpayers take advantage of the benefit.  Tax Point Advisors will provide a complimentary engineering and tax analysis to determine if this benfit can apply to your property and, if so, to provide the required certifications and other assistance to claim the benefit in accordance with IRS regulations.  

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.